Axis Bank shares tumble amid allegations of Rs. 5,100cr scam
Today, Axis Bank's shares fell by over 2% following allegations made by BJP leader Subramanian Swamy in the Delhi High Court. Swamy accused the bank of being involved in a Rs. 5,100 crore scam. He claimed Axis Bank made improper gains through transactions in Max Life Insurance shares, violating the Insurance Regulatory and Development Authority of India's (IRDAI) mandatory directions. Swamy has requested an investigation by a group of experts into the matter.
Profits made in 'non-transparent manner'
Describing the fraud, Swamy stated, "There was a blatant fraud in Max Life Insurance and Max Financial Services." "This allowed their shareholder Axis Bank and its group companies Axis Securities and Axis Capital to make undue profits or gains from the purchase and sale of equity shares of Max Life in a non-transparent manner," he added.
Negligible fine imposed by IRDAI
Swamy claimed that Axis Bank group firms purchased a 12.02% stake in Maxlife Insurance for Rs. 31.51- 32.12 per stock, at a total consideration of Rs. 736 crore. This was much below the fair market value. He also claimed that though IRDAI imposed Rs. 3 crore penalty on Max Life Insurance for misrepresenting facts, it was a negligible sum compared to the size of the "fraud."
Court adjourns case to March
The case was briefly heard by a bench consisting of acting Chief Justice Manmohan and Justice Manmeet Pritam Singh Arora. They adjourned the case until March, after senior advocate Mukul Rohatgi, representing Axis Bank, mentioned that he had not received a copy of the petition. At closing time on the National Stock Exchange (NSE), Axis Bank shares finished 2.01% lower at Rs. 1,074.75.
