SAT sets aside Rs 3 lakh fine on Central Bank of India
- Country:
- India
The Securities Appellate Tribunal (SAT) on Monday set aside a penalty of Rs 3 lakh levied by markets regulator Sebi on Central Bank of India for the violation of debenture trustee norms. The tribunal let off the lender on censure for the violations, according to an SAT order.
"The order of the Adjudicating Officer imposing monetary penalty upon the appellant is set aside instead the appellant is let off on censure for the violations," the tribunal said in an order. In July 2018, markets regulator found that the lender had not entered into written agreements with the issuer companies in respect of Britannia Industries and Deepak Fertilizers and Petrochemicals Corp.
Besides, the Central Bank, while acting as a debenture trustee of IL&FS Ltd provided loan to it and the bank's director held directorship positions in the company. In addition, the bank had not disseminated all information and reports on debt securities including compliance reports filed by the issuers and debenture trustees to the investors and general public by placing the same on its website among other violations.
The Securities and Exchange Board of India (Sebi) had held that by indulging in such activities, the bank has violated the provision of debenture trustee regulation and imposed a fine of Rs 3 lakh. With regard to the loan provided to IL&FS Ltd, SAT noted that the violation was "technical" in nature and "...the disbursement of loan to IL&FS was the cause of old standing relations between the appellant and the Company which could not have been suddenly stopped due to amendment of the DT Regulations in between."
Sebi had further contended that the Central Bank was required to communicate the compliance of the term of issues by the issuer companies and default in payment of interest to the debenture holders on half yearly basis and said that "while the show cause notice is regarding five companies the appellant has given explanation regarding only one Company namely IL&FS." "In the circumstances, the violation of the Regulation is clearly established in the present case," the tribunal said.
With regard to dissemination of information on the website, SAT held that "since there were no default, the requirement of posting information in this regard was merely a formality. The appellant was disseminating other information in substance as detailed above. The default, if any, was therefore only technical in nature." PTI SRS MR MR
(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)
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