BAJAJ BROKING
SEBI has restrained Axis Capital from taking new merchant banker roles in the debt segment due to unauthorised guarantees for Non-Convertible Debentures (NCDs). The regulator highlighted potential risks to market stability from these actions.
The Securities and Exchange Board of India (SEBI) has taken strong action against Axis Capital, barring it from taking up any new assignments in the debt segment as a merchant banker, arranger, or underwriter. This decision comes after SEBI found irregularities related to the firm's involvement in providing guarantees for the redemption of Non-Convertible Debentures (NCDs) issued by Sojo Infotel Pvt. Ltd. Axis Capital's activities were seen as exceeding the permissible scope for merchant bankers under the current regulatory framework.
SEBI’s interim order raised concerns over Axis Capital’s role in guaranteeing the redemption of NCDs. These guarantees went beyond the typical scope of underwriting, which is limited to market risks, not credit risks. The regulator stated that Axis Capital had acted more like a bank, exposing itself and its parent company, Axis Bank, to credit risk through the guarantees it provided.
The merchant banker continued supporting these NCDs over time, earning ongoing fees, which is a violation of the rules governing merchant bankers, who are typically paid a one-time fee for underwriting activities. SEBI found that Axis Capital’s involvement posed a risk to the financial system by undermining market integrity.
As Axis Capital is a subsidiary of Axis Bank, the regulator pointed out that these actions exposed the bank to further risks. SEBI highlighted that such activities have the potential to disrupt the orderly functioning of the market, especially since Credit Rating Agencies (CRAs) had rated the NCDs based on Axis Capital’s guarantees. Investors relying on these ratings may have been misled by Axis Capital’s unauthorised guarantee structure.
In response to these findings, SEBI has barred Axis Capital from taking up new roles in the debt segment, including as a merchant banker, arranger, or underwriter, until further notice. Axis Capital has been directed to respond to SEBI’s observations within 21 days. This action underscores SEBI's focus on maintaining market stability and enforcing strict compliance in the financial sector.
Disclaimer: Investments in the securities market are subject to market risk, read all related documents carefully before investing.
This content is for educational purposes only. Securities quoted are exemplary and not recommendatory.
For All Disclaimers Click Here: https://bit.ly/3Tcsfuc
Learn Everything About Breakout Trading
13 Dec, 2024 | 9 Min. read
Gold Price in India | Gold Drops 1% After Reaching Five-Week High
13 Dec, 2024 | 39 Min. read
Statement of Account and Demat Account: Meaning & Differences
13 Dec, 2024 | 4 Min. read
What are the Timing For Commodity Market Trading?
13 Dec, 2024 | 6 Min. read
Defence Ministry Signs ₹13,500-Crore Deal with HAL for Su-30MKI Jets
13 Dec, 2024 | 2 Min. read
Kalpataru Projects To Raise ₹1,000 Cr Via QIP; Bags ₹2,174 Cr Orders
13 Dec, 2024 | 2 Min. read
Repo Rate & Reverse Repo Rate: Differences, Full Form & Meaning
13 Dec, 2024 | 5 Min. read
What is Spread Betting and How Does it Work
13 Dec, 2024 | 9 Min. read
Ashok Leyland Wins ₹345.58 Crore Order for 1,475 BSVI Bus Chassis
13 Dec, 2024 | 2 Min. read
Zomato Faces ₹803 Crore GST Demand, Including Interest and Penalty
13 Dec, 2024 | 2 Min. read
Share Market Today | Gift Nifty Indicates Negative Start For Indian Markets
13 Dec, 2024 | 4 Min. read
Why are PSU Stocks Down: Know Hidden Factors!
13 Dec, 2024 | 8 Min. read
RBI Launches ULI: Transforming Loan Access
August 27, 2024 | 4 Min. read
Textile Sector in India
September 20, 2024 | 5 Min. read
List of IPOs with DRHPs Filed
November 30, 2023 | 3 Min. read
Aditya Birla Group
September 28, 2023 | 10 Min. read
Bajaj Housing Finance Ltd IPO: Things Smart Investors Need to Know
September 05, 2024 | 4 Min. read
Budget Stock Ideas 2024-2025 | Stocks to Buy Today
July 24, 2024 | 4 Min. read
IPO Eligibility Criteria : Full Details
March 15, 2024 | 6 Min. read
What Is the Lock-In Period in IPOs?
October 18, 2023 | 6 Min. read
Godfrey Phillips Announces 2:1 Bonus Shares
September 16, 2024 | 7 Min. read
Jindal Group- A Comprehensive Analysis
September 27, 2024 | 7 Min. read
Level up your stock market experience: Download the Bajaj Broking App for effortless investing and trading