The Insurance Regulatory and Development Authority (IRDAI) has increased penalty imposed on Max Life Insurance for violation of norms with respect to transfer of shares in Axis Bank-Max Life Insurance deal. The revised penalty of Rs 3 crore is imposed on Max Life, while a penalty of Rs 2 crore has been levied on Axis Bank.
The total penalty of Rs 5 crore has to be remitted within 21 days, IRDAI said.
With this new order, the earlier one on IRDAI website remain replaced.
Responding to the same, Max Financial Services in an exchange filing said that the company had taken appropriate approvals from its shareholders for cementing the long-term strategic partnership with Axis Bank.
"Max Life is examining IRDAI order and will take all appropriate actions in this regard," it said.
Earlier, IRDAI asked Axis Bank to pay Rs 2 crore penalty in 21 days, which included Rs 1 crore penalty on Max Life Insurance. Now, this amount has been increased.
Last year, Max Group sold a 13 percent stake in Max Life Insurance Company to the country's third largest private sector lender Axis Bank, which would then become a co-promoter of the insurer.
In 2020, Axis Bank and Max Financial Services had first announced the deal under which Axis Bank proposed to acquire 29 percent stake in Max Life Insurance. Also, the transaction provided for a ‘Put option’ under which Axis Bank could sell all its shares to Max Financial Services at Rs 294 per share if value creation option was not consummated.
On June 26, 2020 CNBC-TV18 had reported on the Insurance Regulator seeking clarification from Max Life Insurance on some deal contours. Queries sent by IRDAI were regarding the valuation and ‘Put option’ involved in the deal structure.
First Published: Oct 16, 2022 9:15 AM IST
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