Axis Capital, a leading player in the financial services sector, is exploring legal options after the Securities and Exchange Board of India (SEBI) temporarily banned the company from undertaking new assignments as a merchant banker in the debt market. The company, however, clarified that this restriction applies solely to its debt segment operations, and all other services will continue as usual.
Understanding SEBI’s Action Against Axis Capital
On Thursday, SEBI issued an interim order barring Axis Capital from working as a merchant banker, arranger, or underwriter for any debt-related securities, including Non-Convertible Debentures (NCDs). The regulatory body found that Axis Capital had provided guarantees for the redemption of NCDs under the guise of underwriting, a practice SEBI flagged as outside the existing legal framework. SEBI’s concern is that such actions could destabilize the financial market, leading to irregularities in the orderly functioning of the debt segment.
The ban is currently in place until further notice from SEBI.
Axis Capital’s Clarification and Next Steps
Axis Capital, a subsidiary of Axis Bank, has been quick to clarify its position on SEBI’s interim order. The firm noted that it has not taken on any new debt assignments for over a year, and its revenue from the debt segment made up just 5% of its total income in FY 2023-24. The company emphasized that all its other business lines, such as equity capital markets, M&A, REITs, and private equity, remain unaffected.
Axis Capital is actively evaluating its legal options, ensuring that it explores all available remedies under the current regulatory framework.
Commitment to Compliance and Client Interests
Reaffirming its commitment to regulatory compliance, Axis Capital stated that the company continues to prioritize risk management and client satisfaction. The firm is focused on maintaining the highest standards of integrity and compliance with existing rules and regulations. Despite the SEBI order, Axis Capital assured its clients that the company’s strong business pipeline remains intact, and it will continue to provide top-notch execution in other financial segments.
