Axis Bank said on Tuesday its entities have entered into a revised agreement with Max Financial to buy another 7 per cent in Max Life Insurance Company.

The private-sector lender became a co-promoter of Max Life in April 2022 after it completed the purchase of a 12.99 per cent stake in the insurer, following approval from the Insurance Regulatory and Development Authority of India (IRDAI) in February.

Under the deal terms, Axis entities had a right to acquire an additional stake of up to 7 per cent in Max Life, in one or more tranches, subject to regulatory approvals.

However, in October the insurance regulator fined Axis Bank Rs 2 crore and Max Life Rs 3 crore over the pricing methodology — bank entities had first sold 0.998 per cent of equity shares for Rs 166 per share on the principle of fair market value based on the certificate of a chartered accountant.

Just 22 days later, two entities — Axis Capital and Axis Securities — bought a 12 per cent stake in the range of 31.51- 32.12 apiece based on valuation under Rule 11 UA of Income-tax Rules, 1962, which were opposed by the regulator as there were no uniform method of valuing the two deals.

The IRDAI had asked Axis and Max Life to revise their valuation methodology. Axis Bank should buy the remaining 7 per cent at a uniform and fair market value. In a regulatory filing on Tuesday, Axis Bank said its entities have entered into revised agreements.

It said Max Financial has agreed to the valuation and the shares would be sold on the discounted cash flow method instead of fair market value based on income-tax rules.

The revision has been done after Max Life received guidance on the matter from the IRDAI.

The announcement led to the shares of Axis Bank ending lower 0.73 per cent at Rs 951.90, while Max Financial Services gained over 4 percent to settle at Rs 770.45 on the BSE. The markets expected a higher price for the sale of the shares, though Axis Bank did not disclose the details.