"An application was filed by MLIC (Max Life) and HDFC Life seeking the in-principle approval of IRDAI for the... scheme on September 21, 2016. IRDAI has expressed reservations to accept the scheme of amalgamation in its current form," confirmed Max India in its filing with the Bombay Stock Exchange.

According to the merger proposal, a listed life insurance company will be formed through merging Max Life with Max Financial Services, demerging the company's insurance business and thereafter merging it with HDFC Life Insurance. The non-insurance business was to be merged with Max India.

It is perceived that IRDAI would have the tendency to ask questions on the business plans of the merged entities as well as its projected returns from banc assurance because of the alterations in its relationship.

Max Life said, "MLIC and HDFC Life believe that the scheme of arrangement as submitted to the IRDAI is in compliance with all applicable laws and propose to represent and clarify the matter to IRDAI."

Prior to this merger proposal, several proxy firms had recommended others investors to disagree with the merger because of the Max promoters' non-compete fee of Rs 850 crore tas it was sad to be part of the deal.

A proxy advisory firm named IiAS said, "The non-compete fees are being paid by the merged entity (HDFC Life + Max Life), which implies that the minority shareholders of MFSL and Max Life (who will receive HDFC Life shares) will bear part of the expenses. Further, as non-compete fees, the promoters receive over Rs 100 per share in addition to the shares of the combined entity - which is a 21% premium over the returns for non-promoter shareholders."

Max Life Insurance, the leading non-bank promoted private life insurer, is a joint venture between Max Financial Services Ltd. and Mitsui Sumitomo Insurance Co. Ltd. Max Financial Services Ltd. is part of the Max Group, a leading Indian multi-business corporation, while Mitsui Sumitomo Insurance is a member of MS&AD Insurance Group, which is amongst the leading insurers in the world.

Max Life Insurance offers comprehensive long term savings, protection and retirement solutions through its high quality agency distribution and multi-channel distribution partners.

HDFC Bank, on the other hand, is an Indian banking and financial services company headquartered in Mumbai, Maharashtra. It has about 87,555 employees and has a presence in Bahrain, Hong Kong and Dubai. HDFC Bank is the second largest private bank in India as measured by assets. It is the largest bank in India by market capitalization as of February 2016. It was ranked 69th in 2016 BrandZTM Top 100 Most Valuable Global Brands.