NEW DELHI: Axis Bank on Friday said the Reserve Bank has not allowed it to directly acquire 17 per cent stake in Max Life Insurance and the lender will now purchase shares in the life insurer along with its subsidiaries.
Axis Bank and its entities have revised the agreement with Max Financial, the promoter of Max Life, to acquire 19.002 per cent stake in the insurance firm, the lender said in a regulatory filing.
In late August this year, Axis Bank had entered into a definitive agreement with Max Financial Services Ltd (Max Financial) for the direct acquisition of 17.002 per cent of equity share capital of Max Life Insurance Company Ltd (Max Life) by the lender.
"In response to Axis Bank's application to the Reserve Bank of India or directly acquiring 17.002 per cent of the equity share capital of Max Life, the Reserve Bank of India has advised Axis Bank that the application for direct acquisition of 17.002 per cent has not been considered," it said in a regulatory filing.
Axis Bank has been advised to be guided by the relevant regulations of RBI, it added.
"Axis Bank and its subsidiaries -- Axis Capital Ltd and Axis Securities Ltd (together Axis Entities) have agreed to enter into revised agreements with Max Financial for acquisition of up to 19.002 per cent of the equity share capital of Max Life (revised agreements)," the filing said.
The lender said its total stake in Max Life will remain within the limits stipulated under the applicable laws and regulations.
"Under the revised agreements, Axis Bank will acquire upto 9.002 per cent of the equity share capital of Max Life, and Axis Capital Limited and Axis Securities Limited will together acquire upto 3 per cent of the share capital of Max Life.
"In addition, Axis entities will have a right to acquire an additional stake of upto 7 per cent of the equity share capital of Max Life, in one or more tranches, in accordance with existing laws and regulations," it said.
The revised agreements will supersede the previous agreements entered into between the parties.
The transaction is subject to conditions precedent, including regulatory approvals, the lender added further.
Axis Bank was to originally acquire 29 per cent stake in Max Life.
However, some changes had to be made to the deal following correspondence from the Insurance Regulatory and Development Authority of India (Irdai).
Axis Bank currently holds about 1 per cent stake in Max Life and is the biggest banking channel partner for the distribution of the insurer's products.
Products sold through the bank reportedly account for 54 per cent of Max Life's revenues.
Stock of Axis Bank closed at Rs 492.40 apiece on BSE, down 0.26 per cent from previous close.