New Delhi, March 27 SBICAP Trustee Company has settled with the capital markets regulator, SEBI, a case alleging violations of debenture trustee norms after paying Rs 23.45 lakh towards settlement charges.
Following the receipt of the settlement amount by SEBI, the adjudication proceedings initiated against SBICAP Trustee Company Ltd, vide Show Cause Notice (SCN) dated October 8, 2024, are hereby disposed of in terms of (Settlement Proceedings) regulations, the regulator said in the order passed on Friday.
In its show cause notice, SEBI observed that in two non-convertible debenture (NCD) issuances of JM Financial Asset Reconstruction Company Ltd (JMFARCL), where SBICAP Trustee acted as debenture trustee, no encumbrance was created on the securities offered as security through the depository system on the security receipts.
The regulator also noted that only a deed of hypothecation had been executed, and STCL did not obtain holding statements from the depository participant, as required under the market norms, as per the order.
Further, STCL had failed to exercise due diligence with respect to obtaining necessary documents and creating encumbrance as required through the depository system for the security receipts offered as security by JMFARCL, the regulator said.
Accordingly, the Securities and Exchange Board of India (SEBI) initiated adjudication proceedings in respect of SBICAP Trustee Company, for alleged violations of provisions of SEBI's (Debenture Trustees) norms and related master circulars.
Thereafter, the market watchdog issued an SCN on October 8, 2024, against STCL.
Pending adjudication proceedings, SBICAP Trustee filed a settlement application "without admitting or denying the findings of fact and conclusions of law".
Following recommendations by SEBI's internal committee and the High Powered Advisory Committee, the Panel of Whole Time Members approved the settlement terms.
Subsequently, SBICAP Trustee Company Ltd paid the settlement amount of Rs 23.45 lakh on January 19, 2026, which was confirmed by the regulator, following which the proceedings were disposed of.
However, SEBI clarified that it retains the right to reopen the case if representations made during the settlement process are found to be false or if terms are breached.