SBICAP Trustee Company Settles SEBI Case with ₹23.45 Lakh Payment over Debenture Trustee Lapses
Moneylife Digital Team 30 March 2026
SBICAP Trustee Company Ltd (STCL) has settled proceedings initiated by the market regulator Securities and Exchange Board of India (SEBI) by paying ₹23.45 lakh, bringing to a close an adjudication case related to alleged lapses in its role as a debenture trustee.
 
SEBI had initiated adjudication proceedings against STCL, a registered debenture trustee, for alleged violations of provisions under the SEBI (Debenture Trustees) Regulations, 1993, and the Master Circular for Debenture Trustees. The regulator’s action stemmed from observations regarding deficiencies in due diligence and compliance in relation to certain non-convertible debenture (NCD) issuances.
 
The case specifically involved two NCD issuances by JM Financial Asset Reconstruction Company Ltd (JMFARCL), where STCL acted as the debenture trustee. SEBI noted that while a deed of hypothecation had been executed to secure the debentures, the required encumbrance on the underlying security receipts was not created through the depository system. This was a key compliance requirement aimed at safeguarding investor interests.
 
Further, the regulator observed that STCL failed to obtain holding statements from the depository participant, as mandated under the applicable circular. These lapses indicated a failure to exercise adequate due diligence and to ensure proper creation and monitoring of security for the debentures.
 
A show-cause notice (SCN) was issued to the company in October 2024, asking why an inquiry should not be conducted and penalties imposed under the SEBI Act. However, during the pendency of the proceedings, STCL opted to settle the matter through SEBI’s settlement mechanism, without admitting or denying the findings.
 
The internal committee (IC) of SEBI, after reviewing the case in January 2025, recommended a settlement amount of ₹23.45 lakh. The company subsequently submitted revised settlement terms agreeing to pay the same amount and also provided details of actions taken against officials responsible for the lapses.
 
The proposal was later approved by the high powered advisory committee (HPAC) and subsequently by SEBI panel of whole time members(WTM) in January 2026. Following this, a demand notice was issued, and STCL paid the settlement amount on 19 January 2026.
 
With the payment confirmed, SEBI disposed of the adjudication proceedings under the provisions of the SEBI (Settlement Proceedings) Regulations, 2018.
 
However, the regulator clarified that the settlement order is subject to certain conditions. SEBI retains the right to reopen the case if it finds that the company failed to make full disclosures, violated any undertakings, or if discrepancies emerge in the settlement process.
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