The Securities and Exchange Board of India (Debenture Trustees) Regulations, 1993 form the cornerstone of India’s regulatory framework governing debenture trustees—entities entrusted with safeguarding the interests of debenture holders. These regulations came into force on the date of their publication in the Official Gazette and have since undergone several amendments to align with evolving corporate, financial, and governance standards.
At their core, these regulations define key terms, establish eligibility norms, set up the registration process, and outline the obligations and conduct expected from debenture trustees. Let’s explore the key components and their significance.
Key Definitions: Building the Foundation
The regulations begin with an extensive set of definitions to ensure clarity and uniform interpretation.
- “Act” refers to the SEBI Act, 1992, anchoring these regulations in SEBI’s overarching statutory framework.
- “Associate” is defined in line with the Companies Act, 2013 and applicable accounting standards, reflecting SEBI’s intent to integrate contemporary corporate norms.
- “Board” refers to the Securities and Exchange Board of India itself.
- “Body corporate” is aligned with the Companies Act, 2013 and includes public financial institutions, NBFCs, and PSUs issuing listed debt—expanding the pool of eligible entities.
- Other important terms such as debenture, debenture trustee, issue, principal officer, trust deed, and recognised stock exchange are also clearly articulated.
SEBI’s consistent updates—through amendments in 2003, 2006, 2011, 2017, 2023, and 2025—reflect its effort to keep these definitions relevant and comprehensive.
Eligibility: Who Can Act as a Debenture Trustee?
Regulation 7 outlines stringent eligibility conditions. Only the following entities may function as debenture trustees:
- Scheduled commercial banks
- Public financial institutions
- Insurance companies
- Certain categories of body corporates under the Companies Act, 2013
This ensures that only financially sound, professionally managed institutions are entrusted with safeguarding debenture holders’ rights.
The regulations also stipulate a minimum net worth of ₹10 crore (Regulation 7A), significantly strengthened over the years to enhance financial stability.
Registration Process: Ensuring Regulatory Oversight
Entities wishing to act as debenture trustees must apply to SEBI via Form A, accompanied by a non-refundable fee. SEBI may seek additional clarifications, and applicants must appear before the Board if required.
Applications must be complete in all respects; incomplete submissions may be rejected after giving the applicant an opportunity to correct deficiencies.
In assessing an application, SEBI evaluates factors such as:
- Adequate infrastructure
- Professional experience and staffing
- Presence of qualified legal personnel
- Clean track record and fit-and-proper status
- Capital adequacy
Only after satisfying these criteria does SEBI grant a certificate of registration.
Conditions of Registration: Continuing Compliance
Once registered, debenture trustees must maintain compliance with conditions such as:
- Seeking prior SEBI approval for any change in control
- Paying applicable fees
- Addressing investor grievances within 21 calendar days
- Maintaining ongoing capital adequacy
These conditions reinforce accountability and ensure ongoing investor protection.
Conclusion
The SEBI (Debenture Trustees) Regulations, 1993 provide a robust framework to ensure that debenture trustees function with integrity, professionalism, and adequate financial strength. By laying out clear definitions, eligibility criteria, registration procedures, and ongoing obligations, SEBI safeguards the interests of millions of debt investors and supports the orderly development of India’s corporate bond market.