Sebi fines Central Bank of India for violating debenture trustee norms

Markets regulator Sebi today imposed a penalty of Rs 3 lakh on Central Bank of India for activities carried out by it as a debenture trustee.

The ruling comes after Sebi conducted an inspection of books of accounts and other documents of Central Bank during September 2009 to August 2015 for the possible violation of debenture trustee regulation.

The probe found that Central Bank had not entered into written agreements with the issuer companies in respect of Britannia Industries and Deepak Fertilizers and Petrochemicals Corp, which is in violation of the debenture trustee regulations.

Besides, Central Bank, while acting as a debenture trustee of IL&FS Ltd provided loan to it and the bank's directors held directorship positions in the company, the regulator said in an order.

In addition, the bank had not disseminated all information and reports on debt securities including compliance reports filed by the issuers and debenture trustees to the investors and general public by placing the same on its website, it added.

By indulging in such activities, the bank has violated the provision of debenture trustee regulation.

Accordingly, the Securities and Exchange Board of India (Sebi) has slapped a fine of Rs 3 lakh on the bank.

A debenture trustee is an institution which is custodian of debentures issued by any corporate. It protects the rights of the debenture holders. For this the trustee charges fee. A debenture trustee means a trustee of a trust deed for securing any issue of debentures of a corporate.