Axis Bank Ltd, together with its subsidiaries Axis Capital Ltd and Axis Securities, is a co-promoter of Max Life Insurance Company, having acquired a 12.99% stake in April 2021.

Axis Bank said in its clarification that the penalty (on Max Life Insurance) had no material impact on the bank or its operations as an agency.

Axis Bank stock is up 0.67% or 5.35 points today to ₹805.55. Max Financial Services stock rose 0.49%, or 3.5%, to ₹717.30. In contrast, the BSE benchmark Sensex is up 0.67% or 391.53 to 58,302.77, while the Nifty 50 index is up 0.61% or 104.85 points to 17,285.85.

According to the 8-page IRDAI order, the regulator said Max Life failed to comply with the instructions issued by the regulator on January 28, 2021. Group companies, unreasonable profits/earnings from the purchase and sale of shares in Max Life Insurance Company Ltd. thereby abusing the bank’s dual relationship as shareholder and company representative.”

The regulator also said that in a letter dated February 5, 2021 to the regulator, Max Life was “misrepresented” as to its compliance with instructions it issued on January 28, 2021 seeking approval for the transfer of shares to the Axis Bank and its group companies. The insurer was also instructed to present the IRDAI order to its board at its next meeting so that it can take the necessary steps to prevent such breaches in the future, IRDAI said.

Axis Bank had stated in its 2021 statement that the transaction with Max was completed following formal IRDAI approval in February 2021. As part of the transaction, the Axis companies had the right to earn an additional interest of up to 7% in Max Life in one or more tranches, subject to regulatory approvals. The total premium generated by the alliance was over ₹40,000 crore.