The Securities and Exchange Board of India (Sebi) has fined Vistra (ITCL) India Ltd ₹6 lakh for breaching the Sebi (Debenture Trustees) Regulations and various directives. The fine, issued on August 22, addresses several regulatory lapses related to the preparation and verification of asset-cover certificates.
The Sebi order highlights that Vistra (ITCL) failed to conduct independent due diligence as required. The regulator’s November 2020 circular mandates that debenture trustees (DTs) must independently ensure the adequacy of assets securing debt securities.
Key issues noted include:
- Conflict of Interest: The process allowed issuers to select their own chartered accountants (CAs) from an empaneled list, potentially leading to conflicts of interest.
- Certification Process: Certificates were submitted to issuers first, not directly to the DT, risking the withholding of unfavorable reports.
- Lack of Independent Monitoring: The DT did not participate in the CA’s queries, undermining independent monitoring.
Additional violations involved the DT conducting activities prior to the execution of agreements, failing to update default histories, and relying solely on issuer confirmations for payment status.
