India’s capital market regulator has barred Axis Capital Ltd. from acting as a manager for new offerings of debt by Indian companies, the latest crackdown in the country’s securities market.

India's markets regulator on Thursday barred investment bank Axis Capital from acting as a merchant banker for new debt issues for allegedly violating rules, according to an interim order on the regulator's website.

The Securities and Exchange Board of India has prohibited Axis Capital, a subsidiary of Axis Bank, from taking new assignments as a merchant banker or underwriter in the debt segment due to alleged regulatory violations,

According to market regulator, Axis Capital was taking credit risk exposure, rather than market risk, thereby entering the 'realm of banking'

This raised concerns as Axis Capital Ltd (ACL) was acting more like a bank, taking on credit risk. As Axis Capital continued to support these NCDs, it earned fees over time instead of receiving a one-time payment, which violated the rules for merchant bankers.