Explained: Why Did CCI Impose Rs 40 Lakh Penalty On Axis Bank?

Private sector lender, Axis Bank has informed that the Competition Commission of India (CCI) has imposed a penalty amounting to Rs 40 lakh on the bank. The penalty is related to the acquisition of a stake in CSC e-Governance Services India.

Axis Bank was penalised under Section 43A of the Competition Act, 2002, on August 17.

In its regulatory filing on August 18, Axis Bank said, "We wish to inform you that the Competition Commission of India ("CCI") vide its letter dated August 17, 2023, has imposed a penalty amounting to Rs. 40 lakhs under Section 43A of Competition Act, 2002."

According to PTI reports, the CCI said in the other that the transaction under consideration comprised the acquisition of a 9.91% stake in CSC e-Governance by Axis Bank and was completed in November 2020. For the transaction, Axis Bank was required to give notice to the fair trade regulator. However, it failed to do so, according to the order.

Hence, CCI concluded that the acquisition by Axis Bank was neither solely an investment nor can be considered to be in the ordinary course of business.

In 2020, Axis Bank subscribed to 57,743 equity shares of the face value of Rs 1,000 each that were issued by CSC e-Governance Services India for Rs 6,300 per equity share. This resulted in the acquisition of a 9.91% equity stake in CSC e-Governance Services by the bank. This was part of Axis Bank's strategic investment, as per the regulatory filing.

The private lender acquired CSC e-Governance for a cash consideration of Rs 36.38 crore.

CSC e-Governance is a Special Purpose Vehicle set up by the Ministry of Electronics & Information Technology, Government of India, under the Companies Act, 1956, to oversee the implementation of the Common Services Centre Scheme.

On Friday, Axis Bank's share price closed at Rs 942.95 apiece, up by 0.7% on BSE. The bank's market value is over Rs 2.90 lakh crore as of August 18, 2023.

Axis Bank's stock is currently near the 52-week high of Rs 989.90 apiece on BSE.