SBI settles debenture probe case with Sebi, pays Rs 6.8 lakh

MUMBAI: State-run banking giant SBI has settled a probe by markets watchdog Sebi into alleged violations of debenture trustee regulations during certain public and private bond issues four-and-a-half years ago.

The case has been settled after State Bank of India (SBI) agreed to pay Rs 6.8 lakh towards 'settlement charges', Sebi said today while disposing of the ongoing adjudication proceedings against the bank in this matter.

SBI was found to have acted as both lender and debenture trustee to certain companies.

However, Sebi said it can reopen the case or commence fresh enforcement actions against the bank if any representations made before it during the settlement proceedings are subsequently discovered to be untrue.

Besides, Sebi would initiate fresh action if SBI is found to have breached "any of the clauses/conditions of undertakings/ waivers filed during the current settlement proceedings", the regulator said.

The case relates to a Sebi inspection of the Debenture Trustee (DT) operations of State Bank of India during July 26, 2010 to July 30, 2010.

During the inspection, a few public issues and listed private issues wherein the applicant had acted as DT were examined.

"It was, inter alia, observed that the applicant had acted as both lender and DT to certain companies. The standard trust deed which the applicant had accepted from the issuer companies contained certain clauses which were not in conformity with the provisions of the model trust deed... and certain clauses which were required to be included were not part of the standard trust deed.

Sebi thus observed that SBI had violated various provisions of its DT Regulations and certain clauses of the Code of Conduct for DTs.

In view of this, Sebi had initiated adjudication proceedings against the bank in May 2012 and a Show Cause Notice was later issued to SBI in November that year.

The bank later filed an application in March 2013 with Sebi to settle the matter and later revised its settlement plea in August 2014 by offering to pay Rs 6.8 lakh as 'settlement charges'.

Sebi's High Powered Advisory Committee in a meeting on October last year considered the settlement terms proposed by SBI and recommended the case for settlement upon payment of Rs 6.8 lakh.

The Panel of Whole Time Members of Sebi also accepted these recommendations and the bank was informed about the same earlier this month. Accordingly, SBI has now deposited the amount towards the settlement charges.