The Securities Appellate Tribunal on Monday upheld a Sebi order against Axis Bank, which was asked to pay a fine of R 2 lakh for alleged violations of debenture trustees norms.
Axis Bank was penalised in March after a probe by the Securities and Exchange Board of India (Sebi) found several deficiencies in its functioning as a debenture trustee since 1995.
While dismissing the appeal filed by Axis Bank, SAT on Monday observed that the debenture trustee can’t lend money to an issuer company as well as have common individuals as directors on board of both the parties. Sebi in its order had noted that Hindustan Construction Company (HCC) came out with an issue of R 100 crore of secured redeemable non-convertible debentures (NCD) on a private placement basis in which Axis Bank acted as a trustee to the issue in 2006.
?Axis Bank has lent to HCC a loan agreement dated September 29, 2008. The noticee also lent loan to Jindal Stainless before its R 200 crore issue opened in May 2004. The same are not in compliance with the provisions 13A (b) of the regulations, as the noticee cannot act as a trustee to the company it has lent monies,? said the Sebi order.