The State Bank of India has settled a case through consent mechanism (without admission or denial of guilt) by paying ₹6.8 lakh as settlement charges for alleged violation of various provisions of the debenture trustee (DT) regulations.

Capital market regulator SEBI, while inspecting the debenture trustee operations of SBI between July 26 and July 30, 2010, observed that the bank had acted as both lender and DT to certain companies.

Clauses in trust deed

The standard trust deed which SBI had accepted from the issuer companies contained certain clauses which were not in conformity with the provisions of the model trust deed. It was also not in conformity with certain clauses which were required to be included but were not part of the standard trust deed. This was in violation of the code of conduct for DTs besides various other clauses of the DT regulations, noted SEBI. The regulator initiated adjudication proceedings in May 2012 and issued a show cause notice in November 2012.

While adjudication proceedings were on, SBI applied for settling the case through the consent route by offering to pay ₹6.8 lakh towards settlement charges in August 2014. This was referred to SEBI’s High Powered Advisory Committee, which recommended the case for settlement in October 2014.

The recommendations were accepted by a panel of Whole-Time Members of SEBI and the case settled with the settlement order disposing of the pending adjudication proceedings after SBI remitted the ₹6.8 lakh. The settlement order comes into effect immediately.

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