homefinance NewsAxis Bank Max Life deal: IRDAI asks lender to pay Rs 2 crore in 21 days for violation of norms
Axis Bank-Max Life deal: IRDAI asks lender to pay Rs 2 crore in 21 days for violation of norms
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.
The Insurance Regulatory and Development Authority (IRDAI) on Friday asked Axis Bank to pay Rs 2 crore penalty in 21 days for violation of norms with respect to transfer of shares in Axis Bank-Max Life Insurance deal.
The amount also includes Rs 1 crore penalty on Max Life Insurance, IRDAI said.
"By undertaking the transactions of transfer of shares with the promoters/ shareholders of the insurer (Max Life Insurance Co Ltd) in violation of the directions of the Authority, the Corporate Agent, Axis Bank Ltd has circumvented the maximum limits of commission or remuneration or reward as stipulated in IRDAI (Payment of Commission or Remuneration or Reward to insurance Agents and Insurance Intermediaries) Regulations, 2016 read with Reg 18(1) of IRDAI (Registration of Corporate Agents) Regulations, 2015.," IRDAI said in a notification.
"A penalty of Rs 1 crore is imposed on the insurer by invoking section 102 (b) of the Insurance Act, 1938. The total penalty amount of Rs 2 crore shall be remitted by Axis Bank Limited within a period of 21 days," it added.
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 14, 2022 3:35 PM IST
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