Shares of Axis Bank were falling sharply on Friday after senior BJP leader Subramanian Swamy filed a Public Interest Litigation (PIL) in the Delhi High Court, alleging a massive fraud of ₹5,100 crore related to the sale and purchase of shares of Max Life Insurance Company.

What Happened: Axis Bank has responded to the allegations, asserting that it has obtained all requisite regulatory approvals for the transactions involving the sale/purchase of shares of Max Life Insurance. The bank said it is committed to defending itself against these unfounded accusations, stating that they have no material impact on its operations.

Swamy, in his petition, urged the High Court to launch an investigation into Axis Bank’s alleged fraudulent activities aimed at making “undue profits” through the sale and purchase of Max Life Insurance shares. The public interest litigation is scheduled for further hearing on March 13 after Axis Bank’s senior counsel informed the court that they had not received a copy of the plea.

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The Demand: Swamy called for the establishment of a committee of experts to probe the matter, arguing that it’s essential to expose the “rot” in private sector banks. He alleges that Axis Bank unlawfully gained ₹5,100 crore through non-transparent and regulatory violation-ridden transactions involving Max Life equity shares.

The petition outlines the transactions, highlighting Axis Bank’s sale of its stake to MFSL and Mitsui Sumitomo International in March 2021, followed by the acquisition of shares from MFSL at allegedly below-market prices in March-April 2021, resulting in illicit gains.

Despite the Insurance Regulatory and Development Authority of India (IRDAI) already having imposed a penalty of ₹3 crore on Max Life, Swamy deems this amount negligible compared to Axis Bank’s alleged fraud.

Swamy requested the court to intervene by directing an investigation through a Committee of Experts and formulating comprehensive guidelines to prevent such acts in the future and regulate transactions between banks and financial or insurance institutions, addressing alleged rampant corruption in the industry.

Price Action: Axis Bank shares tumbled 0.66% to ₹1,065.15 near the start of trade on Friday.

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