look news india
New Delhi, September 19 (HS). Market regulator Securities and Exchange Board of India (SEBI) has taken a big action against Axis Capital and has banned it from working as an investment banker in the debt market. The order issued by the market regulator states that this ban against Axis Capital will continue till further orders.
In its order, SEBI has barred Axis Capital from undertaking any new work as an underwriter, arranger or merchant banker for any issue of securities in the debt segment. In this regard, SEBI has also asked Axis Capital to respond within 21 days.
It is noteworthy that SEBI had received a complaint that Axis Capital acted differently from the activities performed by merchant bankers in issuing listed non-convertible debentures (NCDs) of Sojo Infotel. After investigating the allegation, SEBI has issued an order stating that Axis Capital provided guarantee for the redemption of NCDs under the guise of underwriting, which was not permitted under the existing regulatory framework. Such activity creates a risk situation for the financial system, as it can hinder the orderly functioning of the market.
SEBI's order states that the purpose of this regulation is to allow a merchant banker to take market risk by subscribing to the unsubscribed portion of securities offered to investors and to dispose of the securities thus acquired by charging a fee. The order also clarified that under its arrangement with Sojo Infotel, Axis Capital was taking credit risk by providing credit risk cover to NCD subscribers, which is a violation of the rules.