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.

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.

Sebi initiated action into Axis Capital after publication of a report titled ‘Is Axis Capital an Investment Bank or a Hedge Fund?’ authored by a research analyst.

SEBI has barred Axis Capital from taking assignments as a merchant banker, arranger or underwriter in the debt segment.

Axis Capital on Friday said it is exploring legal remedies against markets regulator Sebi's order restraining the firm from taking up new assignments as a merchant banker for the debt segment.

The regulator imposed this restriction as a temporary measure after discovering that Axis Capital had essentially guaranteed the redemption of NCDs under the pretence of underwriting, a practice that is not permitted.

After an inspection by the regulator, it was found that Axis Capital had provided guarantees for the redemption of NCDs of Sojo Infotel Pvt. Ltd, which is not permitted for merchant bankers.

In an exchange filing, the bank added that there had been no loss to any investor or market participant from ACL’s activities. In an interim order on Thursday, Sebi restrained Axis Capital from taking any new assignments as a merchant banker,

Axis Capital is exploring legal options after Sebi banned the firm from taking on new debt assignments. The company claims the ban is unjustified and will continue its other business activities.

The Securities and Exchange Board of India (Sebi) has temporarily barred Axis Capital Limited (ACL) from debt merchant banking activities. Sebi's investigation revealed ACL provided an unauthorized guarantee for non-convertible debentures (NCDs),