Market regulator Securities Exchange Board of India (SEBI) on Thursday imposed a penalty of Rs 5 lakh on Axis Bank for violation of merchant bank regulations. Private lender Axis Bank is registered as a merchant banker with the SEBI.

The regulator said it has fined Axis Bank under the provisions of section 15A(a) of the SEBI Act for its violation of provisions of regulation 27 of Merchant Bankers (MB) Regulations.

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SEBI had examined the debt capital market operations of Axis Bank during the August 2016 to August 2019 period. During the examination, it was observed that Axis Bank had acted as the merchant banker for 22 public issuances of debt of various companies during the period. The lender had also acquired securities in nine public debt issues while acting as a merchant banker.

The non-banking finance companies whose securities Axis Bank had acquired include Dewan Housing Finance, Indiabulls Housing Finance, Reliance Home Finance, Shriram Transport Finance, ECL Finance, L&T Finance and Tata Capital Finance.

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SEBI said that Axis Bank failed to submit transaction details and information related to the acquisition of securities in the said issues, following which the penalty has been imposed. Under SEBI norms, every merchant banker should submit complete particulars of the transactions relating to the acquisition of securities. This is required to be done within 15 days from the date of such transactions.

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“It is an admitted fact that Notice failed to submit the above details within the prescribed period in respect of the above mentioned nine public issuances of debt made by the companies during the period August 2016 to August 2019,” SEBI said in an order.

However, Axis Bank in its response acknowledged that it had failed to comply with reporting norms. The bank said this was an inadvertent violation which was proactively reported to SEBI and was taking swift measures to prevent such violations. It requested forbearance in the matter and a personal hearing to explain the matter in detail.

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SEBI allowed the Axis Bank to present its case in a personal hearing but rejected the settlement application and asked the bank to provide further details in the case.

In a separate submission to SEBI, Axis Bank acknowledged that it had violated merchant banking regulations but requested some forbearance from the regulator by saying that the nine issues represent a small percentage of whole merchant banking transactions.

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However, SEBI found these violations material enough to impose a penalty. The market regulator directed the bank to pay the penalty amount within 45 days of the receipt of this order.