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SEBI has imposed a penalty of Rs 25 lakh on Central Bank for alleged violation of various norms pertaining to debenture trustee.
The SEBI order said that Central Bank of India functioned as debenture trustee for IL&FS even when there was loan outstanding. The loan was given by the Central Bank of India.
According to norms, no debenture trustee will act for any issue if it has lent the loan and the loan is not fully repaid or is proposing to lend money to the body corporate.
A debenture trustee is an institution that is a custodian of debentures issued by any corporate. It protects the rights of the debenture holders. For this the trustee charge fee.
A debenture trustee means a trustee of a trust deed for securing any issue of debentures of a body corporate.
The other allegation pertains to Tata Power non-convertible debentures where the regulator also found violation of norms.
The SEBI conducted an inspection of Central Bank of India from September 30, 2009, to October 9, 2009, during which the team from the regulator examined records and documents pertaining to various issues handled by the bank from 1995.
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