IIFCL Asset Management Company and its four officials have settled their case with SEBI by paying ₹1.02 crore. Last June, SEBI initiated action against them for alleged violation of mutual fund regulation in four investments made by the fund house.

The four individuals who settled the case are — Emandi Sankara Rao, Prasanna Prakash Panda, Anil Kumar Taneja and Sumiran Bansal.

The AMC and its official proposed to settle the proceedings initiated against them, without admitting or denying the findings of facts through a settlement order by paying ₹1.02 crore.

With respect to investment in DP Jain & Co Infrastructure, SEBI, in its show-cause notice, alleged that the AMC failed to ensure the security creation, did not obtain NOC from all the existing lenders, failed to charge penal interest for conditions defined as “event of default” in the Debenture Trust Agreement and there was a shortfall in pledge of shares by the company.

In the case of investment in Feedback Infra, the regulator alleged that equity shares of Feedback Highways OMT which was supposed to be pledged, had not been pledged and all investments including in IL&FS, pending deployment of funds, were contrary to the PPMs (Private Placement Memorandums) of the schemes.

After the entities remitted the settlement amount of ₹1.02 crore and agreed on SEBI’s condition that the amount would not be borne by unit holders of the schemes of IIFCL Mutual Fund, SEBI settled the proceedings initiated against them through a show-cause notice issued in June 2023.

The proposal was approved by both the internal committee of SEBI at its meeting last November and the High Powered Committee in December.

In a bid to boost infrastructure investment, the Government in 2011 Budget proposed to set up Infrastructure Debt Funds. Subsequently, SEBI had issued the guidelines for Infrastructure Debt Funds - Mutual Funds in August 2011. India Infrastructure Finance Company had set up IIFCL Mutual Fund which launched long term infrastructure debt funds of over 10 years. The minimum investment requirement is ₹1 crore with minimum unit size of ₹10 lakh. Primary investments for IDF MF would be debt securities or securitised debt instrument of infrastructure companies or bank loans in respect of completed and revenue generating projects of infrastructure companies or special purpose vehicles.