In an exclusive interview at the Global Fintech Fest, Axis Bank's Managing Director and CEO Amitabh Chaudhry discussed the bank's recent announcement that it would acquire an additional 6 percent stake in Max Life Insurance at Rs 113 per share. During the interview, Chaudhry shed light on the pricing strategy and addressed concerns about regulatory overhang.

Share Market Live

NSE

When questioned about the price justification for the acquisition, Chaudhry said Axis Bank followed the fair pricing formula as stipulated by regulators. He pointed out a prior transaction involving Max Life and Max Financial Services, in which a similar formula had been used, resulting in a transaction in the mid-80s range. Chaudhry underscored that the bank was diligently adhering to regulatory guidelines, but acknowledged that the transaction's final approval rests with the Reserve Bank of India (RBI) and the Insurance Regulatory and Development Authority of India (IRDAI).

"It is not that we are using some different formula, we are following the guidelines issued by the regulator ... this is all subject to approval from Reserve Bank of India and Insurance Regulatory and Development Authority of India," he said.

On regulatory concerns, Chaudhry noted that the regulators maintain communication with each other. He said that during the initial phase of questioning about the transaction, IRDAI had informed both SEBI and RBI about the nature of their discussions with Max and Axis Bank. Chaudhry clarified that the recent SEBI inquiry is related to the same matter and no new developments have occurred beyond that.

"When the initial questions were raised on the transaction itself, and I am talking about the last time. At that time as part of the inter-regulatory governance, I think IRDAI had informed SEBI and RBI about the kind of questions they had raised and some of the discussions they had with Max and Axis Bank. I think it's part of the same thing," he added.

Chaudhry said he was not aware of the specifics of SEBI's ongoing investigation into the earlier transaction but sought to assure that should SEBI to reach out to Axis Bank, it would promptly provide the necessary information.

Addressing concerns about potential shareholder losses due to the difference in the share price between the initial and current transactions — Rs 32 and Rs 113, respectively — Chaudhry said such transactions are conducted with the full consent and approval of the shareholders. He reiterated that Axis Bank's announcement is a declaration of intent, pending required approvals, and that the transaction will proceed only with the approval of all relevant stakeholders.

First Published:Sept 7, 2023 3:41 PM IST