Subramanian Swamy, a senior leader of the Bharatiya Janata Party (BJP), has brought forth serious allegations of a scam involving Axis Bank’s dealings with Max Life Insurance Company. In a public interest litigation (PIL) filed with the Delhi High Court, Swamy claims that Axis Bank orchestrated a scam worth approximately ₹5,100 crore through its sale and purchase of shares in Max Life Insurance. The PIL sheds light on the intricacies of the transactions between Axis Bank, Max Life, and other entities, alleging significant discrepancies and unfair gains.
Max Life Insurance, a prominent player in the Indian insurance sector, operates as a joint venture between Max Financial Services and Axis Bank. The controversy stems from Axis Bank’s proposal to purchase an additional 7% stake in Max Life, amounting to ₹1,612 crore, which received approval from the Insurance Regulatory and Development Authority of India (Irdai) on 6th February. This move would increase Axis Bank’s collective ownership in Max Life to 19.02%, up from its current stake of less than 13%.
Swamy’s petition outlines a series of transactions conducted by Axis Bank between February 2016 and April 2021, alleging that the bank profited substantially from these deals. For instance, the petition highlights a scenario where Axis Bank sold its stake of 0.998% in Max Life to Max Financial Services Ltd and Mitsui Sumitomo International at ₹166 per share. Shortly thereafter, between March and April 2021, Axis Bank and its affiliated entities acquired a 12.002% stake from Max Financial Services at a significantly lower price range of ₹31.51-32.12 per share. Swamy argues that these transactions resulted in exorbitant gains for Axis Bank, as the selling price far exceeded the initial purchase price.
In response to the allegations, Axis Bank has vehemently denied any wrongdoing, dismissing Swamy’s claims as unfounded and devoid of merit. The bank asserts that it obtained all necessary regulatory approvals for the sale and purchase of Max Life shares, emphasizing its commitment to compliance and ethical conduct. Similarly, Max Life has defended the legality of the transactions, stating that they were conducted with the requisite approvals from regulatory authorities such as the RBI, Irdai, and CCI. Both Axis Bank and Max Life have expressed their intent to defend against the allegations and uphold their respective positions before the court.
Subramanian Swamy’s petition further implicates Max Financial Services Ltd and Mitsui Sumitomo International, alleging collusion in facilitating transactions that unfairly favored Axis Bank. He contends that these dealings contravened the directives of Irdai and constituted a blatant fraud perpetrated by Max Life Insurance and Max Financial Services. Subramanian Swamy argues that an independent investigation by a panel of experts is warranted to probe the alleged irregularities and hold the responsible parties accountable.
The matter is scheduled for hearing before a division bench of the Delhi High Court on 13th March. Regulatory bodies such as the Securities and Exchange Board of India (Sebi), Reserve Bank of India (RBI), and Irdai have been named as respondents in the case, along with Axis Bank, its affiliates, and Max Life. Senior counsel Mukul Rohatgi represents the Axis group, while Swamy is represented by senior advocate Rajshekhar Rao.
As the legal battle unfolds, the allegations leveled by Swamy have cast a shadow of doubt over the integrity of Axis Bank’s dealings with Max Life Insurance. The outcome of the court proceedings will not only determine the accountability of the parties involved but also have broader implications for the regulatory framework governing corporate transactions in the insurance sector.
