SEBI censures Axis Capital over guarantee-like support for Sojo Infotel NCDs
SEBI found that Axis Capital's support for Sojo Infotel's Rs 260 crore NCD issue was in substance a guarantee, not underwriting, and has issued a regulatory censure against it.
Key points
- SEBI issued a regulatory censure against merchant banker Axis Capital in an order dated 28 October 2026.
- SEBI found the arrangement on Sojo Infotel's Rs 260 crore NCDs was a guarantee, under which Axis Capital paid Rs 166.84 crore after a default.
- SEBI noted no allegation of harm to investors was on record; the order can be appealed before the Securities Appellate Tribunal.
The Securities and Exchange Board of India (SEBI) has issued a regulatory censure against Axis Capital Limited, a SEBI-registered merchant banker. In an order dated 28 October 2026, SEBI held that Axis Capital's support for non-convertible debentures (NCDs, a type of bond) of Sojo Infotel Private Limited was in substance a guarantee, not permitted underwriting.
What Happened
According to the order, Sojo Infotel issued NCDs worth Rs 260 crore on 25 March 2021, with Axis Capital as "sale arranger". The NCDs were secured partly by a pledge of 26% of the shares of Lava International Ltd held by Sojo's promoters. After Sojo did not fully honour its call option in September 2023, Rs 174 crore remained outstanding. Axis Capital deposited Rs 166.84 crore in Sojo's escrow account on 19 March 2024, which was used to repay the NCDs and interest, the order says. It says Axis Capital charged about Rs 33 crore in fees for the transaction.
SEBI found that this was not underwriting but a guarantee "disguised" as an underwriting commitment, and that Axis Capital had in substance taken on credit risk. It held that Axis Capital violated regulation 13A of the SEBI (Merchant Bankers) Regulations. Axis Capital had argued it acted only as a sale arranger and underwriter. The order notes Axis Capital said it stopped such deals in April 2023 and that they made up about 5-6% of its business.
SEBI noted that no allegation of harm to investors or of default by fraudulent design was on record, and that it could not impose a monetary penalty in these proceedings. Stalling the firm's business years after the violation could be disproportionate, it said. A 2024 SEBI direction barring Axis Capital from such credit-risk cover in the debt segment remains in place until further orders.
What It Means
A censure is a formal rebuke; it does not suspend or cancel Axis Capital's registration. The order signals that SEBI treats guarantee-like support by merchant bankers on debt issues as outside their permitted role. SEBI's order can be appealed before the Securities Appellate Tribunal. Investors with complaints against a SEBI-registered intermediary can use https://scores.sebi.gov.in.
Source: SEBI order
Sources & Citations
- SEBI order — Securities and Exchange Board of India