MASTER CIRCULAR
SEBI/HO/DDHS-PoD-1/P/CIR/2025/117 August 13, 2025
To,
All Registered Debenture Trustees,
Trustees Association of India (TAI)
All Registered Credit Rating Agencies,
Issuers who have listed and/ or propose to list Debt Securities and Municipal
Debt Securities,
Recognized Stock Exchanges, and
Recognized Depositories
Madam/ Sir,
Sub: Master Circular for Debenture Trustees
1. Debenture Trustees are regulated under the provisions of Securities and
Exchange Board of India (Debenture Trustees) Regulations, 1993 (‘DT
Regulations’). While the broad framework for Debenture Trustees has been laid
down in the DT Regulations, over the years, procedural/ disclosure requirements
and obligations have been specified by SEBI through circulars.
2. For effective regulation of the corporate bond market and to enable the
Debenture Trustees and other market stakeholders to get access to all the
applicable circulars at one place, this Master Circular has been prepared.
3. This Master Circular is a compilation of the existing circulars as on August 13,
2025, with consequent changes. The stipulations contained in these circulars
have been detailed chapter-wise in this Master Circular. Accordingly, the list of
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existing circulars for Debenture Trustees which have been superseded by this
Master Circular is placed at Annex-1.
4. Notwithstanding such rescission, -
4.1 anything done or any action taken or purported to have been done or
taken under the rescinded circulars, prior to such rescission, shall be
deemed to have been done or taken under the corresponding provisions
of this Master Circular; and
4.2 any application made to the Board under the rescinded circulars, prior to
such rescission, and pending before it shall be deemed to have been
made under the corresponding provisions of these regulations.
5. The Debenture Trustees are directed to comply with the conditions laid down in
this Master Circular. Further, it is reiterated that the Debenture Trustees shall
have necessary systems and infrastructure in place for implementation of this
circular. The Board of Directors of the Debenture Trustees shall be responsible
for ensuring compliance with these provisions.
6. This Circular is issued in exercise of the powers conferred under:
6.1 Section 11(1) of Securities and Exchange Board of India Act, 1992,
6.2 Regulation 2A of the Securities and Exchange Board of India (Debenture
Trustees) Regulations, 1993,
6.3 Regulation 55 of the Securities and Exchange Board of India (Issue and
Listing of Non-Convertible Securities) Regulations, 2021 (‘NCS
Regulations’),
6.4 Regulation 29 of Securities and Exchange Board of India (Issue and
Listing of Municipal Debt Securities) Regulations 2015, and
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6.5 Regulation 101(1) of Securities and Exchange Board of India (Listing
Obligations and Disclosure Requirements) Regulations 2015 (‘LODR
Regulations’),
to protect the interest of investors in securities and to promote the development
of, and to regulate, the securities market.
Yours faithfully,
Rohit Dubey
General Manager
Department of Debt and Hybrid Securities
Tel No. 022-2644-9510
Email ID - rohitd@sebi.gov.in
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Table of Contents
Chapter I: Terms of Registration.................................................................................................... 5
Chapter II: Due Diligence by Debenture Trustees ................................................................... 13
Chapter III: Security and Covenant Monitoring System ........................................................ 31
Chapter IV: Recovery Expenses Fund ........................................................................................ 50
Chapter V: Security Cover Certificate ........................................................................................ 53
Chapter VI: Periodical/ Continuous Monitoring by Debenture Trustee ............................. 63
Chapter VII: Disclosures on the website of a Debenture Trustee ....................................... 69
Chapter VIII: Provisions relating Debenture Trust Deed, Sharing and Dissemination of
Information by Debenture Trustee .............................................................................................. 78
Chapter IX: Redress of Investors’ Grievances ......................................................................... 83
Chapter X: Breach of Covenants, Default and Remedies ..................................................... 95
Chapter XI: Operational framework for transactions in defaulted debt securities post
maturity date/ redemption date .................................................................................................. 100
Chapter XII: Centralised Database - Responsibilities of Debenture Trustee ................. 102
Chapter XIII: Reporting of regulatory compliance................................................................. 103
Chapter XIV: Guidelines on Outsourcing of Activities by Debenture Trustee .............. 106
Chapter XV: Unauthenticated news circulated by SEBI registered market
intermediaries through various modes of communication ................................................ 114
Chapter XVI: General Guidelines for dealing with Conflicts of Interest by Debenture
Trustee and its Associated Persons in Securities Market .................................................. 116
Chapter XVII: Registration with the FINNET 2.0 system of Financial Intelligence Unit –
India (FIU-India) .............................................................................................................................. 119
Glossary ........................................................................................................................................... 120
Annex-1 ............................................................................................................................................. 122
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Chapter I: Terms of Registration
1. Online registration mechanism for Debenture Trustees:
1.1. The SEBI Intermediary Portal is available at https://siportal.sebi.gov.in for
SEBI registered intermediaries including Debenture Trustees to submit
registration applications online. SEBI Intermediary Portal shall, inter-alia,
include online application for registration, processing of application, grant
of final registration, application for surrender/ cancellation, submission of
periodical reports, requests for change of name/ address/ other details, etc.
The link for SEBI Intermediary Portal is also available on SEBI website –
www.sebi.gov.in.
1.2. All applications for registration/ surrender/ other requests will be made
through SEBI Intermediary Portal only. The applicants will be separately
required to submit relevant documents viz. declarations/ undertakings
required as a part of application forms prescribed in relevant regulations, in
physical form, only for records without impacting the online processing of
applications for registration.
1.3. In case of any queries and clarifications with regard to the SEBI
Intermediary Portal, Debenture Trustees may contact on 022-26449364 or
may write at portalhelp@sebi.gov.in.
2. Digital mode of payment:
2.1. SEBI has enabled digital mode of payment (Real Time Gross Settlement
(RTGS)/ National Electronic Funds Transfer (NEFT)/ Immediate Payment
Service (IMPS), etc.) for fees/ penalties/ remittance/ other payments etc.
2.2. In order to identify and account for such direct credit in the SEBI account,
Debenture Trustee shall provide the information to SEBI once the payment
is made as per the format specified below:
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Date
Department of SEBI
Name of Intermediary/ Other Entities
Type of Intermediary
SEBI Registration Number (if any)
Permanent Account Number (PAN)
Amount (in INR)
Purpose of Payment (including the period for
which payment was made e.g. quarterly, annually)
Bank name and Account number from which
payment is remitted
UTR No.
2.3. The above information should be emailed to the respective department(s)
as well as to the Treasury & Accounts division at tad@sebi.gov.in.
3. Grant of prior approval to Debenture Trustee for change in control:
3.1. Debenture Trustee is required to obtain prior approval of SEBI in case of
change in control. With a view to expedite the process of granting prior
approval, SEBI has adopted a ‘single window clearance at SEBI’, for the
Debenture Trustees in case of their having multiple registrations with SEBI.
3.2. Therefore, in case a Debenture Trustee holds multiple registrations with
SEBI, it shall make only one application addressed to "Chief General
Manager, Department of Debt and Hybrid Securities, SEBI" accompanied
by the following information:
a) Whether any application was made in the past to SEBI seeking
registration in any capacity but it was not granted? If yes, details
thereof.
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b) Whether any action has been initiated/ taken under Securities
Contracts (Regulation) Act, 1956 / Securities and Exchange Board of
India Act, 1992, or rules and regulations made thereunder? If yes,
status thereof along with corrective action taken to avoid such
violations in the future.
c) The acquirer shall also confirm that it shall honour all past liabilities/
obligations of the applicant, if any.
d) Whether any investor complaint is pending? If yes, steps taken and
confirmation that the acquirer shall resolve the same.
e) Details of litigation, if any.
f) That all the fees due to SEBI have been paid.
g) That there will not be any change in the Board of Directors of
incumbent or in its management team, till the time prior approval is
granted.
h) That the incumbent shall inform all its existing investors/ clients in order
to enable them to take informed decisions regarding their continuance
or otherwise with the entity with new management.
3.3. Further, in case the incumbent is a registered stock broker and/ or
depository participant, in addition to the above, it shall obtain approval/ No
Objection Certificate (NOC) from all the Stock Exchanges/ Depositories,
where the incumbent is a member/ Depository Participant and forward a
self-attested copy of the same to SEBI.
3.4. The prior approval granted by SEBI shall be valid for a period of 180 days
from the date of communication.
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4. Effect on change in control in case of transfer of shareholdings among
immediate relatives and transmission of shareholdings in case of a
Debenture Trustee being an unlisted body corporate:
In the following scenarios, change in shareholdings of a Debenture Trustee will
not be construed as change in control:
4.1. Transfer of shareholding among immediate relatives shall not be treated as
resulting in change in control;
4.2. Transfer of shareholding by way of transmission to immediate relative or
not, shall not be treated as resulting in change in control;
Immediate relative shall be construed as defined under Regulation 2(l) of
SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011,
which, inter-alia, includes any spouse of that person, or any parent, brother,
sister or child of the person or of the spouse.
4.3. Incoming shareholders in the Debenture Trustee, pursuant to transfer of
shares from immediate relative/ transmission of shares (immediate relative
or not), need to satisfy the fit and proper person criteria stipulated in
Schedule II of the SEBI (Intermediaries) Regulations, 2008.
5. Transfer of business by SEBI registered intermediaries to other legal
entity:
SEBI has been receiving registration applications pursuant to transfer of
business (SEBI regulated business activity) from one legal entity which is a
SEBI registered Intermediary (transferor) to other legal entity (transferee). In
this regard, following is clarified:
5.1. The transferee shall obtain fresh registration from SEBI in the same
capacity before the transfer of business if it is not registered with SEBI in
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the same capacity. SEBI shall issue new registration number to transferee
different from transferor’s registration number in the following scenarios:
a) Business is transferred through regulatory process (pursuant to
merger/ amalgamation/ corporate restructuring by way of order of
primary regulator/ govt./ National Company Law Tribunal (NCLT), etc.)
or non-regulatory process (as per private agreement/ MOU pursuant
to commercial dealing/ private arrangement) irrespective of transferor
continues to exist or ceases to exist after the said transfer.
b) In case of change in control pursuant to both regulatory process and
non-regulatory process, prior approval and fresh registration shall be
obtained. While granting fresh registration to same legal entity
pursuant to change in control, same registration number shall be
retained.
c) If the transferor ceases to exist, its certificate of registration shall be
surrendered.
d) In case of complete transfer of business by transferor, it shall surrender
its certificate of registration.
e) In case of partial transfer of business by transferor, it can continue to
hold certificate of registration.
6. Surrender of certificate of Registration:
6.1. If a Debenture Trustee wishes to surrender the certificate of registration
voluntarily, it shall transfer, wherever relevant, its existing business/ client
accounts to another SEBI registered Debenture Trustee, before making
such request to SEBI in the format specified in Annex-IA of this Master
Circular.
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6.2. The Debenture Trustee may, if it so desires, make a representation for
dispensing with the procedure, along with the application, for surrender in
terms of the first proviso to Regulation 33B of SEBI (Intermediaries)
Regulations, 2008.
6.3. In all cases of transfer of business or client accounts to another registered
Debenture Trustee, the clients shall not be subjected to any additional cost.
7. Designated e-mail id for regulatory communication with SEBI:
7.1. In order to facilitate the issuance of digitally signed circulars, Debenture
Trustees are required to create a designated email-id for regulatory
communications. This email-id shall be exclusively for the above purpose
and should not be person centric.
7.2. The designated email-id shall be communicated to SEBI by emailing a file
to dt@sebi.gov.in, as prescribed below:
a) The file should be an excel file;
b) The name of the file and the subject of the email shall specify the type
of Debenture Trustee and the name of the Debenture Trustee. For
example – “Debenture Trustee – ABC co. Ltd – communication of
designated email-id.”
c) The file shall contain the following details:
Name Address Category Registration Designated Name of
No. email id compliance
officer
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Annex-IA
Application form for surrender of certificate of registration by Debenture
Trustee
To,
Securities and Exchange Board of India
Sir/ Ma’am,
Sub: Surrender of Certificate of Registration as Debenture Trustee,
Registration No. __.
1. We hereby surrender our certificate of registration as Debenture Trustee.
2. We enclose the original certificate of registration (or indemnity in case the
certificate is lost or stolen) for cancellation.
3. We hereby confirm that:
a. no complaint/ disciplinary proceeding is pending against us;
b. no investigation/ inquiry by SEBI is pending against us with respect to our
activities as a Debenture Trustee;
c. as on date of application, we have paid all fees;
d. we shall continue to be liable for all liabilities/ obligations (including monetary
penalties, if any) for violations, if any, of the provisions of the SEBI Act, Rules
and the SEBI (Debenture Trustee) Regulations, 1993, that have taken place
before our surrender of certificate of registration;
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e. all our current assignments as a Debenture Trustee have been either duly
terminated or transferred to another registered Debenture Trustee _____
with registration no. ______;
f. we have issued a public notice in a widely circulated national and a regional
daily dated________ informing surrender of our registration as Debenture
Trustee
(Please enclose a clipping of the said public notice);
g. We have notified the Depositories and all the Stock Exchanges where our
client companies are listed about the surrender of our registration.
4. *We hereby request SEBI to dispense with the procedure laid down in
Regulation 33B of Securities and Exchange Board of India (Intermediaries)
Regulations, 2008 while processing our request for surrender of certificate of
registration.
Thanking you,
Yours
faithfully,
Name:
(Whole time/ Managing Director/ Principal Officer)
*Please strike off, if not applicable.
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Chapter II: Due Diligence by Debenture Trustees
1. Appointment of Debenture Trustee:
A Debenture Trustee shall ensure compliance with the provisions of the
Regulations 13 and 13A of the DT Regulations with regard to being appointed
as a Debenture Trustee in relation to an issue.
2. Due diligence in respect of secured debt securities:
The Debenture Trustee shall ensure the following with regard to due diligence
at the time of creation of security:
2.1. Documents/ Consents required at the time of entering into debenture
trustee agreement:
In order to enable the Debenture Trustee to exercise due diligence with
respect to creation of security, the Issuer at the time of entering into
debenture trustee agreement shall provide the following information/
documents to the Debenture Trustee:
a) Details of assets, movable property and immovable property on which
charge is proposed to be created including title deeds (original/ certified
true copy by issuers/ certified true copy by existing charge holders, as
available) or title reports issued by a legal counsel/ advocates, copies of
the relevant agreements/ Memorandum of Understanding, copy of
evidence of registration with Sub-registrar, Registrar of Companies
(ROC), Central Registry of Securitization Asset Reconstruction and
Security Interest (CERSAI), etc.
b) For unencumbered assets, an undertaking that the assets on which
charge is proposed to be created are free from any encumbrances.
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c) For encumbered assets, on which charge is proposed to be created, the
following consents along-with their validity as on date of their submission:
i. Details of existing charge over the assets along with details of
charge holders, value/ amount, copy of evidence of registration
with Sub-registrar, ROC, CERSAI, Information Utility (IU)
registered with Insolvency and Bankruptcy Board of India (IBBI),
etc. as applicable;
ii. Consent/ NOC from existing charge holders for further creation of
charge on the assets or relevant transaction documents wherein
existing charge holders have given conditional consent/
permission to the Issuer to create further charge on the assets,
along-with terms of such conditional consent/ permission, if any;
and
iii. Consent/ NOC from existing unsecured lenders, in case, negative
lien is created by Issuer in favour of unsecured lenders.
d) In case of personal guarantee or any other document/ letter with similar
intent is offered as security or a part of security:
i. Details of guarantor viz. relationship with the Issuer;
ii. Net worth statement (not older than 6 months from the date of
debenture trustee agreement) certified by a chartered accountant of
the guarantor;
iii. List of assets of the guarantor including undertakings/ consent/ NOC
as per paragraphs 2.1(b) and 2.1(c) above;
iv. Conditions of invocation of guarantee including details of put options
or any other terms and conditions which may impact the security
created;
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v. List of previously entered agreements for providing guarantee to any
other person along with an undertaking that there are no
agreements other than those provided in the list, if any.
e) In case of corporate guarantee or any other document/ letter with similar
intent is offered as security or a part of security:
i. Details of guarantor viz. holding/ subsidiary/ associate company
etc.;
ii. Audited financial statements (not older than 6 months from the date
of debenture trustee agreement) of guarantor including details of all
contingent liabilities;
iii. List of assets of the guarantor along-with undertakings/ consent/
NOC as per paragraphs 2.1(b) and 2.1(c) above;
iv. Conditions of invocation of guarantee including details of put
options or any other terms and conditions which may impact the
security created;
v. Impact on the security in case of restructuring activity of the
guarantor;
vi. Undertaking by the guarantor that the guarantee shall be disclosed
as “contingent liability” in the “notes to accounts” forming part of the
financial statements of the guarantor;
vii. Copy of Board resolution of the guarantor for the guarantee
provided in respect of the debt securities of the Issuer;
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viii. List of previously entered agreements for providing guarantee to
any other person along with an undertaking that there are no
agreements other than those provided in the list, if any.
f) In case of any other contractual comforts/ credit enhancements provided
for or on behalf of the issuer, it shall be required to be legal, valid and
enforceable at all times, as affirmed by the issuer. In all other respects, it
shall be dealt with as specified above with respect to guarantees.
g) In case securities (equity shares, etc.) are being offered as security then
a holding statement from the depository participant along with due pledge
of such securities in favour of Debenture Trustee in the depository system
shall be ensured.
h) Details of any other form of security being offered viz. Debt Service
Reserve Account (DSRA), etc.
i) Any other information, documents or records required by the Debenture
Trustee with regard to creation of security and perfection of security.
2.2. Due diligence by a Debenture Trustee for creation of security:
2.2.1. Regulation 15(6) of the DT Regulations inter-alia requires a
Debenture Trustee, to exercise independent due diligence to ensure
that security is free from encumbrances, adequate consent has been
taken from existing charge holders, if any, etc. Regulation 15(1)(i) of
the DT Regulations places obligations on the Debenture Trustee to
ensure that the assets of the Issuer are sufficient to discharge the
interest and principal amount with respect to debt securities of the
Issuer at all times.
2.2.2. A Debenture Trustee, by itself or through professionals appointed and
compensated/ remunerated by the Debenture Trustee viz., practicing
chartered accountant, practicing company secretary, registered
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valuer, or legal counsel shall independently carry out due diligence.
The terms and conditions with respect to exercising due diligence
shall also be included in the debenture trustee agreement. The due
diligence to be exercised by Debenture Trustee with respect to
creation of security shall, inter-alia, include the following:
(a) Debenture Trustee shall verify that the assets provided by Issuer
for creation of security are free from any encumbrances or
necessary permissions or consents has been obtained from
existing charge holders by carrying out the following checks:
(i) Verify from ROC, Sub-registrar, CERSAI, IU or other sources
where charge is registered/ disclosed as per terms.
(ii) In case of conditional consent/ permission received as per
para 2.1(c)(ii) above:
(A) Verify whether such conditional consent/ permission given
to Issuer by existing charge holders is valid as per terms
of transaction documents; and
(B) Intimate existing charge holders through necessary and
appropriate means (including via e-mail) about the
proposal to create further charge on assets by Issuer
seeking their comments/ objections, if any, to be
communicated to the Debenture Trustee within next five
working days.
(b) In case of personal guarantee, corporate guarantee and any other
guarantees/ form of security, the Debenture Trustee shall verify
the relevant filings made on websites of Ministry of Corporate
Affairs (MCA), Stock Exchange(s), CIBIL, IU, etc. and obtain
appraisal report, necessary financial certificates from
professionals as referred earlier in this Chapter.
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2.2.3. A Debenture Trustee, by itself or by engaging professionals, shall
prepare one or more reports viz. valuation report, ROC search report,
title search report/ appraisal report, security cover certificate, any
other report/ certificate as applicable etc. and shall independently
assess that the assets for creation of security are adequate for the
proposed issue of debt securities.
2.2.4. A Debenture trustee shall issue ‘due-diligence certificate’ to the
Issuer, as per format specified in Annex-IIA of this Master Circular,
subject to the following:
(a) Information on consents/ permissions required for creation of
further charge on assets is adequately disclosed in Offer
Document (‘OD’)/ Placement Memorandum (‘PM’).
(b) All disclosures made in the OD/ PM with respect to creation of
security are in conformity with the clauses of debenture trustee
agreement.
(c) All covenants proposed to be included in debenture trust deed
(including any side letter, accelerated payment clause etc.) are
disclosed in OD/ PM.
2.2.5. A Debenture Trustee shall maintain records and documents pertaining
to due diligence exercised for a period of five years from redemption
of the debt securities unless required by law, or on account of any
enquiries or proceedings to retain such records.
2.3. Due Diligence Certificate in case of Shelf Prospectus/ Placement
Memorandum:
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2.3.1. In case security details have not been finalized at the time of filing of
a draft shelf prospectus/ placement memorandum by an issuer, then
the Debenture Trustee shall undertake due diligence as under:
(a) The Debenture Trustee may furnish a due diligence certificate,
confirming that it has carried out due diligence for the clauses
other than that related to security creation [clauses are specified
in the formats prescribed under Regulations 40 (1) (a) and 44 (3)
(a) of the NCS Regulations and Annex-IIA of this Master
Circular].
(b) At the time of the issuance of the tranche prospectus/ placement
memorandum when the issue structure including terms related to
security has been determined and finalized, the Debenture
Trustee shall issue a due diligence certificate covering all clauses
of formats prescribed under Regulations 40 (1) (a) and 44 (3) (a)
of the NCS Regulations and Annex-IIA of this Master Circular.
2.4. Encumbrance on securities for issuance of listed debt securities:
2.4.1. Creation of encumbrance on the securities for securing the listed debt
securities shall be through the depository system only in accordance
with the Depositories Act, 1996, the SEBI (Depositories and
Participants) Regulations, 2018, Depository bye laws and other
applicable regulations and circulars.
2.4.2. Encumbrance for the above shall mean the following:
(a) Pledge, hypothecation, mortgage, lien, negative lien, non-
disposal undertaking or non-disposal agreement;
(b) Any restriction on the free and marketable title to the asset, by
whatever name called, whether executed directly or indirectly;
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(c) Any covenant, transaction, condition or arrangement in the nature
of encumbrance, by whatever name called, whether executed
directly or indirectly.
2.5. Disclosures in the OD/ PM and filing of OD/ PM by the Issuer:
2.5.1. The Issuer, in addition to disclosures made under Schedule I of the
NCS Regulations and circulars issued thereunder, shall also disclose
the following in the OD/ PM:
(a) “Debt securities shall be considered as secured only if the
charged asset is registered with Sub-registrar and Registrar of
Companies or CERSAI or Depository etc., as applicable, or is
independently verifiable by the Debenture Trustee”, and
(b) Terms and conditions of Debenture Trustee Agreement including
fees charged by Debenture Trustee, details of security to be
created and process of due diligence carried out by the Debenture
Trustee; and
(c) Due Diligence Certificate as per the format specified in Annex-IIA
of this Master Circular.
2.5.2. An Issuer proposing to make an issue of debt securities by way of a
public issue or offer debt securities by way of a private placement,
shall submit to the Stock Exchange, a Due Diligence Certificate from
the Debenture Trustee as per the format specified in Annex-IIA and
update the same into the Security and Covenant Monitoring System
operated by a recognised Depository, which the Debenture Trustee
shall validate/ confirm on such system as detailed in Chapter III of this
circular.
2.6. Creation and registration of charge of security by the Issuer:
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2.6.1. Before making the application for listing of debt securities, the Issuer
shall create charge as specified in the OD/ PM, in favour of the
Debenture Trustee and also execute a debenture trust deed1 with the
Debenture Trustee.
2.6.2. The Stock Exchange shall list the debt securities only upon receipt of
a due diligence certificate as per format specified in Annex-IIB of this
Master Circular from the Debenture Trustee confirming creation of
charge and execution of the debenture trust deed.
2.6.3. The charge created by Issuer shall be registered with Sub-registrar,
Registrar of Companies, CERSAI, Depository etc., as applicable,
within 30 days of creation of such charge. In case the charge is not
registered anywhere or is not independently verifiable, then the same
shall be considered a breach of covenants/ terms of the issue by the
Issuer.
2.7. Manner of change in security/ creation of additional security/
conversion of unsecured to secured in case of already listed debt
securities:
2.7.1. Regulation 59 of the LODR Regulations provides for a change in terms
of listed debt securities. A change in the structure of debt listed debt
securities, inter-alia, may include:
a) A change in security,
b) Creation of additional security in case of already secured listed
debt securities, or
c) Creation of security in case of unsecured listed debt securities.
1 Form SH 12 of Companies (Share Capital and Debentures) Rules, 2014
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2.7.2. In order to harmonize the process of creation of security pursuant to
listing, the following directions are issued:
a) Before initiating due diligence, the Debenture Trustee and the
Issuer shall ensure compliance with the paragraphs 2.1 and 2.2
of this Chapter.
b) Pursuant to carrying out of due diligence as per paragraphs 2.1
and 2.2 of this Chapter, the Debenture Trustee shall issue a NOC
to the Issuer for going ahead with proposed change in the
structure/ creation of security.
c) Thereafter, the Issuer shall create the proposed security and the
charge in favour of Debenture Trustee and the same shall be
registered with the sub-registrar, ROC, CERSAI, Depository, etc.,
as applicable, within 30 days of creation of such charge. In case
the charge is not registered anywhere or is not independently
verifiable, then the same shall be considered as a breach of the
covenants/ terms of the issue by the Issuer.
d) Pursuant to the creation and registration of charge, the Issuer and
Debenture Trustee shall enter into a supplemental/ amended
debenture trust deed including all the terms and conditions arising
out of the due diligence carried out by the Debenture Trustee as
well as of the security created by Issuer.
e) The Issuer, pursuant to execution of supplemental/ amended
debenture trust deed, shall submit the following to the
Depositories and Stock Exchanges:
i. NOC by Debenture Trustee for change in security or
creation of security.
ii. Executed supplemental/ amended debenture trust deed;
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iii. An undertaking from the Debenture Trustee that the
security has been created and registered.
iv. Other documents/ consents required to be submitted to
Stock Exchanges and Depositories in terms of Regulation
59 of the LODR Regulations, circulars issued thereunder
and bye-laws of Stock Exchanges and Depository, as
applicable.
f) The Depository shall assign a new ISIN to the listed debt
securities pursuant to submission of documents mentioned above
only and shall share the information with respect to change in ISIN
of listed debt securities, with the recognized Stock Exchanges.
g) It may be noted that none of the cases mentioned in paragraph
2.7.1 would constitute a change in the structure of the listed debt
securities, provided there are no other changes to the terms/
nature of issue of the listed debt securities such as maturity date,
coupon rate, face value, redemption schedule, nature of the debt
securities (secured/ unsecured), etc. Accordingly, the Depository
shall not assign a new ISIN in such cases. However, where there
is a change in the underlying security, the Debenture Trustee shall
ensure compliance with the provisions of Regulation 15(1)(i) of
DT Regulations.
2.8. Engagement of independent professionals by Debenture Trustee:
2.8.1. For the purpose of availing the services of an independent
professional for carrying out due diligence and continuous monitoring
under the provisions of this Master Circular, the Debenture Trustee
shall:
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a) Put in place a criterion/ policy for engagement of an independent
professional/ availing the services of an independent professional
as approved by its board of Directors and shall disclose the same
on its website
b) Formulate a policy on mitigating conflict of interest and shall
disclose the same on its website; the policy shall, inter-alia,
include a requirement that the independent professional should
not have had pecuniary relationship with the issuer three years
prior to the date of opening of the issue.
c) The Debenture Trustee shall directly compensate/ remunerate the
professional who is engaged.
2.8.2. While a Debenture Trustee may avail the services of independent
professionals, the responsibility shall rest with the Debenture Trustee.
3. Format for Due Diligence Certificate in respect of unsecured debt securities2:
3.1. In line with the format specified under the NCS Regulations, the following is
specified for unsecured debt securities:
3.1.1. At the time of filing the draft offer document with the stock exchanges,
Issuer shall submit to the Stock Exchange(s), a Due Diligence
Certificate obtained from the Debenture Trustee as per the format
specified in Annex-IIC.
3.1.2. At the time of filing of listing application, Issuer shall submit to the Stock
Exchange(s), a Due Diligence Certificate obtained from the Debenture
Trustee as per the format specified in Annex-IID.
2 SEBI Circular No. SEBI/HO/DDHS/DDHS-PoD-3/P/CIR/2025/009 dated January 28, 2025
Page 24 of 122
Annex-IIA
FORMAT OF DUE DILIGENCE CERTIFICATE TO BE GIVEN BY THE
DEBENTURE TRUSTEE AT THE TIME OF FILING THE DRAFT OFFER
DOCUMENT/ PLACEMENT MEMORANDUM
To,
Stock Exchange
Dear Sir / Madam,
SUB.: ISSUE OF ____________________ BY _______________LTD.
We, the debenture trustee(s) to the above mentioned forthcoming issue state as
follows:
1. We have examined documents pertaining to the said issue and other such
relevant documents, reports and certifications.
2. On the basis of such examination and of the discussions with the Issuer, its
directors and other officers, other agencies and on independent verification of
the various relevant documents, reports and certifications, WE CONFIRM that:
a) The Issuer has made adequate provisions for and/or has taken steps to
provide for adequate security for the debt securities to be issued and listed.
b) The Issuer has obtained the permissions / consents necessary for creating
security on the said property(ies).
c) The Issuer has made all the relevant disclosures about the security and also
its continued obligations towards the holders of debt securities.
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d) Issuer has adequately disclosed all consents/ permissions required for
creation of further charge on assets in offer document/ placement
memorandum and all disclosures made in the offer document/ placement
memorandum with respect to creation of security are in confirmation with the
clauses of debenture trustee agreement.
e) Issuer has disclosed all covenants proposed to be included in debenture
trust deed (including any side letter, accelerated payment clause etc.), offer
document/ placement memorandum.
f) Issuer has given an undertaking that charge shall be created in favour of
debenture trustee as per terms of issue before filing of listing application.
We have satisfied ourselves about the ability of the Issuer to service the debt
securities.
PLACE:
DATE:
DEBENTURE TRUSTEE TO THE ISSUE WITH HIS STAMP
Page 26 of 122
Annex-IIB
FORMAT OF DUE DILIGENCE CERTIFICATE TO BE GIVEN BY THE
DEBENTURE TRUSTEE AT THE TIME OF FILING OF LISTING APPLICATION
BY ISSUER
To,
Stock Exchange
Dear Sir / Madam,
SUB.: ISSUE OF ____________________ BY _______________LTD.
We, the debenture trustee(s) to the above mentioned forthcoming issue state as
follows:
1) We have examined documents pertaining to the creation of charge over assets
of Issuer.
2) On the basis of such examination and of the discussions with the Issuer, its
directors and other officers, other agencies and of independent verification of the
various relevant documents, WE CONFIRM that:
(a) The Issuer has created charge over its assets in favour of debenture trustee as
per terms of offer document/ placement memorandum and debenture trustee
agreement.
(b) Issuer has executed the debenture trust deed as per terms of offer document/
placement memorandum and debenture trustee agreement.
(c) The Issuer has given an undertaking that charge shall be registered with Sub-
registrar, Registrar of Companies (ROC), Central Registry of Securitization
Asset Reconstruction and Security Interest (CERSAI), Depository etc., as
applicable, within 30 days of creation of charge.
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We have satisfied ourselves about the ability of the Issuer to service the debt
securities.
PLACE:
DATE:
DEBENTURE TRUSTEE TO THE ISSUE WITH HIS STAMP
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Annex-IIC
FORMAT OF DUE DILIGENCE CERTIFICATE TO BE GIVEN BY THE DEBENTURE
TRUSTEE AT THE TIME OFFILING OF DRAFT OFFER DOCUMENT/ PLACEMENT
MEMORANDUM
To,
Stock Exchange
Dear Sir/ Madam,
SUB.: ISSUE OF ____________________ BY _______________LTD.
We, the Debenture Trustee (s) to the above mentioned forthcoming issue state
as follows:
(1) We have examined documents pertaining to the said issue and other such relevant
documents, reports and certifications.
(2) On the basis of such examination and of the discussions with the issuer, its
directors and other officers, other agencies and of independent verification of
the various relevant documents, reports and certifications, WE CONFIRM that:
a. All disclosures made in the offer document with respect to the debt
securities are true, fair and adequate to enable the investors to make a well
informed decision as to the investment in the proposed issue.
b. Issuer has disclosed all covenants proposed to be included in debenture
trust deed (including any side letter, accelerated payment clause etc.), offer
document/ placement memorandum.
c. Issuer has given an undertaking that the debenture trust deed shall be executed
before the filing of listing application.
PLACE:
DATE:
DEBENTURE TRUSTEE TO THE ISSUE WITH HIS RUBBER STAMP
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Annex-IID
FORMAT OF DUE DILIGENCE CERTIFICATE TO BE GIVEN BY THE DEBENTURE
TRUSTEE AT THE TIME OF FILING OF LISTING APPLICATION BY ISSUER
To,
Stock Exchange
Dear Sir / Madam,
SUB.: ISSUE OF ____________________ BY _______________LTD.
We, the Debenture Trustee (s) to the above mentioned forthcoming issue state as
follows:
(1) On the basis of examination of documents pertaining to the issue and of the
discussions with the issuer, its directors and other officers, other agencies and of
independent verification of the various relevant documents, reports and certifications,
WE CONFIRM that:
a. Issuer has executed the debenture trust deed as per terms of offer
document/ placement memorandum and debenture trustee agreement.
b. The issuer has made all the relevant disclosures, which are true, fair and
adequate and also its continued obligations towards the holders of debt
securities.
PLACE:
DATE:
DEBENTURE TRUSTEE TO THE ISSUE WITH HIS RUBBER STAMP
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Chapter III: Security and Covenant Monitoring System
1. In order to strengthen the process of security creation, monitoring of security
created, monitoring of security cover and covenants of the debt securities,
a platform for ‘Security and Covenant Monitoring System’ (‘system’) hosted
by Depositories has been introduced.
2. The system shall be used for recording and monitoring of the security
created and monitoring of covenants of debt securities. The system shall,
inter alia, capture:
2.1. the process of creation of security (viz. due diligence, charge creation
etc.);
2.2. continuous monitoring of covenants by Debenture Trustees (as
applicable);
2.3. credit rating of the debt securities by the Credit Rating Agencies (CRAs).
3. Depositories shall create, host, maintain and disseminate the system for
security and covenant monitoring using distributed ledger technology (or
similar such technologies). Further, the depositories shall:
3.1. Provide secure login credentials to Issuers, CRAs, Debenture Trustees
etc. for recording and/ or verifying and/or viewing requisite information
on the system.
3.2. Put in place adequate safeguards to ensure the integrity and security of
the data on the system.
3.3. Share information with the other Depository for integrating and
maintaining a compatible system.
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3.4. Develop an alert mechanism to be sent to the stakeholders on
submission, acceptance and rejection of information, and alerts for
periodic and event based compliances.
3.5. Wherever necessary, provide the feature of document upload by the
various stakeholders on the system.
3.6. Provide functionality of maintaining a trail/ log of all the communication/
interaction amongst various stakeholders viz. CRAs, Debenture
Trustees, Issuers, Depositories etc. and also in the system on account
of recording and/or verification and/or viewing of information by the
stakeholders.
3.7. Provide functionality in the system to make changes in already recorded
information by stakeholders (in case a change is required to be made for
rectifying any discrepancy or recording additional information) and
verification of same by responsible stakeholder (as applicable) and due
logs/trail and prior versions of such changes.
3.8. Be responsible for the effective and smooth functioning of the system
and shall develop a mechanism to establish accountability/ responsibility
for the rectification of various issues and glitches that may hamper the
effective functioning of the system.
3.9. Have in place operational guidelines for the system after consultation
with various stakeholders.
4. In line with current market practices, related to issuance of debt securities,
the system, as per the nature of the debt securities, shall enable various
stakeholders to record information for the following aspects:
4.1. Security creation, security cover and covenants;
4.2. Periodical monitoring of security cover and covenants;
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4.3. Interest and redemption payment (part and full) of debt securities;
4.4. Credit Rating information
5. Accordingly, the role and responsibilities of various stakeholders in the
system have been defined below.
A. Recording of information related to security creation, security cover
and covenants
5.1. Information regarding assets offered as security (Security creation/
Security Cover):
a) Issuer shall record relevant details regarding proposed ‘Security
creation/ Security Cover’ (if applicable) including asset details, other
related documents in the system based on the type of asset offered
for security creation as per Annex-IIIA of this Master Circular.
Issuers shall fill all the requisite fields in the system at the time of
creation of temporary ISIN/ ISIN.
b) The assets offered as security by an Issuer shall be recorded in the
system pursuant to validation/ verification by the Debenture Trustee
in terms of provisions of Chapter II.
c) In case the value and details of assets recorded are not in line with
the terms of proposed issue of debt securities, the Debenture
Trustee shall not validate the same and shall reject the same on the
system and make due remarks explaining the same. The system
shall send an intimation to the Issuer to rectify any discrepancy or
record additional details regarding assets offered as security before
initiating issuance of temporary ISIN/ ISIN which shall also require
being validated and verified by the Debenture Trustee.
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d) The Debenture Trustee shall also upload the reports/ documents
viz. valuation report, ROC search report, title search report/
appraisal report, security cover certificate, due diligence certificate
as per Annex-IIA of this Master Circular and other related reports/
certificates as applicable etc. on the system.
5.2. Recording of charge creation and charge registration details on the
system:
a) Pursuant to creation of charge in favour of Debenture Trustee (as
per provisions of Chapter II), the Issuer shall upload the details of
the charge created on the system as per Annex-IIIB of this Master
Circular. The Issuer shall also upload all the relevant documents
supporting the charge such as Pledge Master Report etc.
b) The Debenture Trustee shall then validate the details of the charge
entered in the system from Sub Registrar, ROC, CERSAI,
Information Utility of IBBI or any other independently verifiable
source and shall confirm the same on the system and update any
subsequent changes, in case of any discrepancy.
c) Pursuant to the issuance of due diligence certificate by the
Debenture Trustee to the Stock exchange as per Annex-IIB of this
Master Circular, the same shall be uploaded on the system by the
Issuer.
5.3. Modification in the information recorded on the system:
Any change in already recorded information on the system related to
charge creation, registration details etc. due to any discrepancy or any
modification in the value or details of the security provided on account of
provision of additional security by the Issuer or reduction or substitution
of existing security provided by the Issuer, shall be made after verification
and validation by Debenture Trustee and information regarding requisite
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documents and permission/ consent obtained shall also be recorded on
the system.
5.4. Recording of covenants in the system:
a) The Issuer shall enter the covenants of the issuance in the system
and upload the debenture trust deed within five working days of
signing of debenture trust deed, including but not limited to the
following:
i. Covenants as to title of Security
ii. Covenants as to Security Cover as per terms of Issue
iii. Covenant as to further borrowing/ issues
iv. Covenant as to creation of further encumbrances on the
security.
v. Financial covenants including any restrictions on payment of
dividends, maintaining Debt/ equity ratio, Gross Debt to
EBITDA, Debt to Value Ratio etc.
vi. Covenants as to any change in nature and conduct of business
or disposal of assets.
vii. Covenants with respect to changes in the composition of its
Board of Directors.
viii. Covenants with respect to related party transactions by the
Issuer.
ix. Monitoring of Debenture Redemption Reserve, Debenture
Redemption Fund, Recovery Expense Fund.
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x. Other non-financial covenants such as credit rating, negative
lien undertaking, etc.
b) Debenture Trustee shall validate the covenants so entered by the
Issuer within seven working days of signing the Debenture Trust
Deed.
B. Periodic monitoring of Security Cover and Covenants
5.5. The Issuer shall provide the half yearly certificate by the statutory
auditor certifying the security cover and upload the same on the system
in the format as per Annex-VA of this Master Circular. The periodicity
of filing this certificate on the system shall be co-terminus with that of
the financial results as per regulation 52 of the LODR Regulations.
5.6. The Issuer shall, on a periodic basis, upload the necessary and
applicable documents, information within stipulated time so as to enable
the Debenture Trustee to exercise its functions in relation to monitoring
of Security cover and covenants.
5.7. In order to carry out periodical monitoring on security created/
covenants, the Debenture Trustee shall:
a) Validate and upload the security cover certificate.
b) Update the value of the assets in the system based on the periodic
valuation carried out by the Debenture Trustee, by itself or through
professionals in terms of provisions of Chapter II of this Master
Circular.
c) Upload the title search reports, valuation reports etc., in terms of
provisions of Chapter II of this Master Circular.
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d) The Debenture Trustee shall release charges in case any debt is
repaid and update/ validate the same in the platform.
C. Interest and redemption payment:
5.8. Interest and principal payment:
a) The Issuer shall record information pertaining to payment of interest
and repayment of principal on the system at the time of creation of
ISIN/ temporary ISIN. The issuer shall also record the status of such
payment/ repayment within one working day of payment/ redemption
due date after taking requisite details from Registrar and Transfer
Agent. The format for the same is as specified in Annex-IIIC of this
Master Circular.
b) Once such information is recorded on the system, the Debenture
Trustee shall validate the status of such payment/ repayment in the
system after receiving the requisite details from the Registrar and
Transfer Agent including file prepared for payment of interest and
repayment of principal, Bank confirmation etc. Such status shall be
validated within two working days on the basis of the documentary
evidence submitted by the Issuer and the Registrar and Transfer
Agent.
5.9. Non-receipt of information on the system:
a) In case of non-receipt of information in the system viz. the Issuer fails
to intimate the status of payment of interest or repayment of principal,
the Debenture Trustee shall seek status of such payment/ repayment
from the Issuer and/ or conduct independent assessment (from banks,
investors, etc.) to determine the same.
b) Based on such assessment, the Debenture Trustee shall update in the
system the status of such payment/ repayment, within seven working
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days of the interest payment becoming due or nine working days of the
maturity/ redemption date.
c) The Debenture Trustee shall update the details in the system and
initiate necessary action as per provisions of Chapter X to this Master
Circular.
5.10. Redemption of debt securities:
a) Issuer shall initiate the release of charges and update the system with
the relevant documents including but not limited to Statutory Certificate,
No dues from the holders of debt securities (applicable only in case of
private placement), ISINs Extinguishment letter, ROC Charge
Satisfaction forms/ certificate.
b) The Debenture Trustee shall release charges in case any debt is repaid
and update/ validate the same in the platform.
D. Credit Rating information:
5.11. The Issuer shall upload all the credit rating information for debt
securities including rating action, date of press release and hyperlink
for press release of credit rating. CRAs shall access the system to
validate the rating information uploaded by the Issuer. In case of
discrepancy, Issuer and/ or CRAs shall notify the same on system and
update the correct information in the system within two working days
of such notification.
5.12. Any subsequent rating actions carried out by CRAs shall be recorded
in the system by the Issuer within one working day of the press
release, which shall inter-alia comprise rating action including rating
outlook, date of press release and hyperlink for press release of credit
rating. In case of discrepancy, Issuer and/ or CRAs shall notify the
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same on system and CRAs shall update the correct information in the
system within two working days of such notification.
6. Unique asset identifier:
6.1. As the backbone of the system is the uniqueness of the record of assets,
a system generated unique identifier (Asset ID) shall be allotted for each
asset offered by the Issuer as security for the debt securities. For data
exchange and verification across Depositories, format for unique Asset
ID shall be a 12-digit alphanumeric string, which will be generated as
provided in Annex-IIID of this Master Circular.
6.2. To ensure that there is only one unique asset ID assigned to an asset
of the issuer for effective asset creation as well as tracking, the system
will provide an alert to the Issuer and the Debenture Trustee by having
appropriate validation/ duplicate checks in the system for identifying
possible duplicate entries for assets of an issuer and this validation/
duplication check shall be based on the parameters as per Annex-IIIE
of this Master Circular. Issuers shall ensure that the entry of the asset
is made only once in the system for generation of the unique Asset ID,
which shall be verified by the Debenture Trustee.
7. The following assets shall be tracked at portfolio level and no specific
parameters for the underlying assets would be captured:
7.1. movable assets viz furniture, equipment, inventory etc.
7.2. current assets viz portfolio of advances/ receivables, etc.
7.3. any other asset of similar nature.
8. On detection of a duplicate asset, an alert shall be generated and sent to
the Issuer and Debenture Trustee to cross check and verify the details
entered into the system for recording the details of asset. The Issuer and
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the Debenture Trustee should verify and address the alert before overriding
the same.
9. Monitoring/ Trigger events:
9.1. While the Depository shall ensure that there is only one unique asset ID
assigned to an asset of the issuer, Debenture Trustee, on a yearly basis,
shall reconcile the list of assets recorded in the system for an Issuer and
in case any duplicate entry is found for an asset, shall take necessary
steps to eliminate such duplicate entries in the system and verify
security cover thereof and take remedial action, if required.
9.2. Any event which reduces the security cover below the mandated/
stipulated limit, as per regulation 54 of the LODR Regulations, shall be
updated by the issuer in the system immediately. Such event shall be
termed as ‘trigger event’ and Depository shall send such trigger events’
alerts to all the concerned stakeholders.
10. All issuers of debt securities shall ensure that the details are recorded in the
system before activation of ISIN3. Depositories shall allot or defreeze an
existing ISIN (in case of re-issuance), as applicable, only after confirming
recording of information in the system.
11. For existing outstanding debt securities, issuers were required to enter the
details in the system on or before January 31, 2023 and Debenture Trustees
were required to verify the same by February 28, 2023.
12. Issuers, Debenture Trustees, CRAs, etc. shall have such mechanism to
execute such functions as required for the system.
3 Applicable for all issues made on or after April 01, 2022
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Annex-IIIA
Registration of assets for initial due diligence
1. Type and nature of security offered:
a. Immovable Property
b. Movable Fixed Assets
c. Current Assets viz., receivables, book debts
d. Intangible viz., IPRs, etc.,
e. Securities/ Other Financial Asset
f. Assignment of rights
g. Guarantee viz personal corporate, corporate guarantee, government
guarantee etc.
2. Details related to security offered – The required data to be to be filled along
with supporting documents, wherever applicable:
a. Asset description
i. Asset name
ii. Asset Details (in case of shares, it shall also include ISIN, Quantity,
Pledgee Demat ID, Pledgee Instrument ID)
iii. Asset Location (including address of the asset)
iv. Asset ownership details
b. Value of security offered: Issuer shall submit documents as required
under Chapter II of this Master Circular and other documents given by
Issuer for ascertaining the existence, veracity and value of assets.
c. Documents related to existing encumbrance on assets/ security
offered:
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Issuer shall record following details in the system and/ or submit
documents:
i. For unencumbered assets, an undertaking that the assets on
which charge is proposed to be created are free from any
encumbrances.
ii. For encumbered assets, on which charge is proposed to be
created, the Issuer shall submit documents in system as per para
2.1. (c) of Chapter II of this Master Circular and any other
document required to be given by the Issuer to the Debenture
Trustee.
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Annex-IIIB
Manner of updation of charge creation details on System:
1. Issuer shall enter the following details related to charge created on system
as and when applicable:
1.1. Asset details
1.2. Type of Charge Creation
1.3. Charge holder
1.4. Amount
1.5. Date on which charge is created
1.6. Modification date
1.7. Charge Closure date i.e. redemption date.
2. System shall ensure every charge details recorded in the system shall have
a unique number. Therefore, an asset with a unique asset ID shall be
mapped against multiple charge IDs.
3. After registering the charge creation details on ROC, CERSAI and IU or any
other independent agency, Issuer, shall update the same on depository
platform wherein Issuer will enter the following details:
3.1. Date of application/ filing with statutory/ government authority.
3.2. Details of any receipt or challan obtained by Issuer after filing.
3.3. List of documents submitted to Agency
3.4. Certificate/ document obtained from statutory/ government authority
after successful registration of charge.
4. An individual charge created maybe required to be registered with more than
one agency, hence depository may enable Issuer to upload the above
mentioned information for more than one agency.
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Annex-IIIC
Interest and principal payment details
1. Issuers shall fill all the requisite fields in at the time of creation of ISIN/
temporary ISIN as specified by filling in the following details:
Item Details
 Name of Instrument
 Date of Information Memorandum
 Issue Size
 No. of Instrument
Interest  Face Value (Rs.)
Payment  Rate of Interest
 Interest Amount to be paid on due date
 Record Date
 Frequency
 Due date for Interest Payment
 Name of Instrument
 Date of Information Memorandum
 Record Date
 Frequency
 Type of Redemption
 If Partial Redemption, then
Redemption - By Face Value Redemption
payment - By Quantity Redemption
 If Redemption is based on Quantity, specify whether
on:
- Lot Basis
- Pro-rata basis
 Reason for redemption
 Redemption due to PUT option (if any)
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Item Details
 Redemption due to CALL option (if any)
 Quantity and Amount Redeemed
 Due date for Redemption/ Maturity
 Date of early Redemption (if any)
2. Issuers shall fill all the following requisite fields to update the status of
payment within one working day of payment/ redemption date or a change in
the due date of interest payment/ redemption payment as under:
 Actual Date for Interest Payment
 Amount of interest paid
Updation by Issue  Date of last Interest Payment
on continuous basis  Reason for non-payment/ delay in payment
– Payment of  Change in Frequency of payment (if any)
Interest  Date of Change
 Details of such change
 Change in Record Date
 Actual Date for Redemption
Updation by Issue  Amount Redeemed
on continuous basis  Outstanding Amount (Rs.)
–  Reason for non-payment/ delay in payment
Redemption  Date of previous redemption (part redemption),
payment if applicable
 Change in Record Date
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Annex-IIID
Asset ID = System Code + Asset Type + Asset Sub Type + Unique Number +
Check Digit
System Code 2 characters (‘IN’ – for all asset types and sub-types)
Asset type 2 character Alphanumeric
Asset sub-type 2 character Alphanumeric
Unique Number 5 character alphanumeric sequential (start with 00001 to
99999.
Post full utilization of numbering then prefix will start from
A-Z.)
Check Digit 1 digit
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Annex-IIIE
1. Common parameters across asset types: The following is an indicative
list of parameters which shall be captured for all categories of asset types
and subtypes to assign Asset ID:
a) Asset name
b) Short description of Asset
c) Asset type & sub-type
d) Address details of the assets including PIN Code for assets located in
India, wherever available.
e) Ownership details of the asset
f) Valuation details of the asset
g) Unique Identification Number, if any, provided by regulator/agencies and
the agency identifier.
h) Code along with Code Description in ERP (Enterprise Resource
Planning) system of the issuer, wherever available.
i) Code along with Code Description in FAR (Fixed Asset Register) of the
issuer, wherever available.
j) Validity/ Expiry date, if any.
k) Encumbrance/ lien details, if any.
2. Specific additional parameters for certain asset types: In addition to the
above, following parameters shall also be captured for these specific asset
types and subtypes.
Sr. Asset Type Asset Sub Parameters to compare for
No. Type Duplicate check
1. Immovable All a. Area of the property
Property (Residential, b. Geographical Coordinates
Commercial (Latitude, Longitude).
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Sr. Asset Type Asset Sub Parameters to compare for
No. Type Duplicate check
Industrial,
Agriculture,
etc.)
2. Current Specific a. Details related to account
Assets accounts maintained suc h as Bank Name,
maintained account number, IFSC code etc.
(DSRA, b. Mode of maintenance of account
DRR, MRR (Current account/ Fixed Deposit/
etc.) Bank Guarantee etc.) and details
thereof.
3. Securities/ Securities in a. Demat Account Number
other Demat form b. ISIN Number
financial c. Quantity
assets c. Pledgee and pledger details
4. Guarantees Government a. Issuing Authority
b. Government order number
c. Government order date
d. Guarantee Amount
Corporate a. Guarantor details such as Name
of the company, address, net
worth etc.
b. PAN/CIN No. for guarantors in
India
c. For guarantors outside India
i. Unique Identification Number
provided by Regulator/
Authority of the host country
ii. Issuing Regulator/ Authority
d. Guarantee Amount
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Sr. Asset Type Asset Sub Parameters to compare for
No. Type Duplicate check
Personal a. Guarantor details such as Name
of the company, address, net
worth etc.
b. PAN No for guarantors in India
c. For guarantors outside India
i. Passport Number
ii. Passport Issuing
Country
d. Any other Unique Number
provided by regulator of the host
country along with name of the
regulator.
e. Guarantee Amount
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Chapter IV: Recovery Expenses Fund
In order to enable the Debenture Trustee to take prompt action for enforcement/legal
proceedings in case of ‘default’ in listed debt securities, a ‘Recovery Expense Fund’
(REF) shall be created which shall be used in the manner as decided in the meeting
of the holders of debt securities.
1. Manner of creation and operation of REF
1.1. The issuer proposing to list debt securities shall deposit an amount equal to
0.01% of the issue size subject to maximum of Rs. 25 lakhs per issuer
towards REF with the ‘Designated Stock Exchange’, as identified and
disclosed in its Offer Document.
1.2. The REF shall be created and maintained in the following form:
a. The issuer shall deposit cash or cash equivalent(s) including Bank
Guarantees towards contribution to this fund at the time of making the
application for listing of debt securities.
b. The Designated Stock Exchange shall invest such cash in the REF in
Government Securities or Treasury Bills or Fixed Deposits with a
Scheduled commercial bank or gilt or overnight mutual fund schemes
and the income/interest earned thereof shall be added to the REF of the
issuer.
c. The issuer shall ensure that the Bank Guarantee remains valid for a
period of six months post the maturity date of the listed debt security.
The issuer shall keep the bank guarantee in force and renew the Bank
Guarantee at least seven working days before its expiry, failing which
the Designated Stock Exchange shall invoke such Bank Guarantee.
1.3. In case of any change in status of issuer of the listed debt securities on
account of corporate restructuring by way of Scheme of Arrangement etc.,
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the Designated Stock Exchange shall ensure that the amount maintained in
the REF is available as per paragraph 1.1 before issuing the ‘No-objection
letter’ in that regard.
2. Manner of utilization of Recovery Expense Fund:
2.1. In the event of default, the Debenture Trustee/ Lead Debenture Trustee
shall obtain the consent of holders of debt securities for enforcement/ legal
proceedings and shall inform the same to the Designated Stock Exchange.
The Designated Stock Exchange shall release the amount lying in the REF
to the Debenture Trustee/ Lead Debenture Trustee within five working days
of receipt of such intimation.
2.2. For the purpose of the provisions of this Chapter, Lead Debenture Trustee
shall mean:
1. A Debenture Trustee who is chosen as the Lead Debenture Trustee by
other Debenture Trustees; or
2. A Debenture Trustee who represents holders of more than 50% of the
outstanding value of debt securities.
2.3. The Debenture Trustee shall keep a proper account of all expenses incurred
out of the funds received from REF towards Legal expenses, cost for hosting
meetings etc. towards enforcement/ legal proceedings in relation to the Debt
securities.
3. Refund of REF to the Issuer
3.1. The balance in the REF shall be refunded to the issuer on repayment to
holders of debt securities on their maturity or at the time of the exercise of
call or put option, upon a ‘No Objection Certificate (NOC)’ being issued by
the Debenture Trustee to the Designated Stock Exchange.
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3.2. The Debenture Trustee shall satisfy that there is no ‘default’ on any other
listed debt securities of the issuer before issuing the NOC.
4. Verification of creation of REF
4.1. In order to ensure independent verification by a Debenture Trustee
regarding creation of REF by issuer, Debenture Trustee shall take
confirmation from Designated Stock Exchange or any other independent
source in writing regarding the creation of REF by the issuer and shall not
rely solely upon the communication by the issuer.
4.2. The Stock Exchange shall disclose on their websites, the amount of REFs
created by the issuers on a half yearly basis. Such disclosure shall also
include the details of the Debenture Trustee for the debt securities.
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Chapter V: Security Cover Certificate
In terms of regulation 54 read with regulation 56(1)(d) of the LODR
Regulations, Issuers are required to disclose security cover to Stock Exchange
and Debenture Trustee. The obligations of the Issuer and the Debenture
Trustee with respect to preparation and submission of security cover certificate
are given as under:
1. Manner of preparation of security cover certificate by the Issuer:
1.1. The Issuer shall be required to prepare the security cover certificate on
quarterly basis and the statutory auditor of the Issuer shall certify the book
values of the assets provided in such certificate.
1.2. The Issuer shall provide the values in the format under the market values
column including the reference date based on which the market value has
been arrived at and the certificate shall be submitted to the Debenture
Trustee. In case of loans/ receivables or any other asset offered as security
and the market value is not ascertainable in the specific quarter, then the
Issuer may provide the carrying value/ book value as per the format for
security cover is enclosed at Annex-VA of this Master Circular. However,
the Issuer shall provide the justification for not providing the market value
along with the certificate in that quarter.
1.3. The frequency of valuation for asset classes offered as security by the Issuer
shall be as under:
a) In case of asset classes wherein frequency of valuation has been
prescribed by SEBI, the market value shall be provided, accordingly,
in the security cover certificate.
b) For the asset classes wherein there is no regulatory guideline on
frequency of the valuation of a specific asset class then it shall be
on quarterly basis.
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1.4. In case, the issuer has more than one Debenture Trustee for its listed debt
securities, then the Issuer shall prepare such certificate separately for each
Debenture Trustee.
1.5. The assets that are not paid for shall not be included as part of any security
cover calculation.
1.6. In case security cover offered for the debt securities comprises the assets of
the Issuer only, the security cover shall be prepared on standalone basis.
1.7. In case debt securities are secured by creation of charge on the assets of a
third party/ subsidiary/ group/ holding company; or assets of the Issuer are
offered for securing the debt securities issued by a third party/ subsidiary/
group/ holding company; or assets of the Issuer are offered for securing the
other liabilities of third party/ subsidiary/ group/ holding company, the Issuer
shall make disclosure in two separate tables on security cover as follows:
a) Table for security cover on standalone basis for the Issuer and;
b) Table on net summary basis on consolidated level in order to provide
the overall/ holistic picture of the borrowings and security cover
provided by the Issuer.
1.8. Obligations of the Issuer in case of third party/ subsidiary/ group/ holding
company assets being offered as underlying security:
a) The book value for security cover shall be certified by the statutory
auditor of the third party/ subsidiary/ group/ holding company with
respect to third party/ subsidiary/ group/ holding company assets
being offered as underlying security.
b) In case, security cover comprises exclusive charge on third party/
subsidiary/ group/ holding company assets, the security cover
certified by the statutory auditor of the concerned third party/
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subsidiary/ group/ holding company shall include details of such
assets including the book value of such assets.
c) In case, security cover comprises pari-passu charge/ second/ third
charge on third party/ subsidiary/ group/ holding company assets, the
security cover certified by the statutory auditor of the concerned third
party entity shall include the detail of all encumbrances on such
assets.
1.9. Further, in order to adequately capture details regarding other debt
securities, viz. unsecured debentures, subordinated debt, other debt
issuances which fall in the lower priority order in the waterfall mechanism for
liquidation/ resolution proceeds, an additional column named “Debt not
backed by any assets offered as security” shall be incorporated in the
security cover certificate and the same shall be covered under such column.
2. Manner of preparation and submission of security cover certificate by
Debenture Trustee(s):
2.1. Debenture Trustee on a quarterly basis shall certify the market value of
assets based on the due diligence carried out by it or through independent
professionals and shall submit the security cover certificate as per Annex-
VA of this Master Circular.
Debenture Trustee shall certify the security cover in respect of the secured
debt securities, to the extent that the security is held by it.
2.2. In case the Issuer has more than one Debenture Trustee for its listed debt
securities, then Debenture Trustees may choose a common independent
professional for preparation of security cover certificate.
2.3. In case of reduction in the computed value of security cover in comparison
to the previous quarter or previously calculated security cover, the
Debenture Trustee shall record the reason for such variation in the security
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cover certificate. Clarification, if any, in this regard, may be obtained by
Debenture Trustee from the Issuer.
3. Calculation of Security Cover Ratios
In order to standardize calculation of security cover ratio as prescribed in
Annex-VA of this Master Circular, the following formulas shall be used:
3.1. Exclusive security cover shall be calculated in the following manner:
Exclusive
3.2. Pari-passu security cover shall be calculated in the following manner:
Pari-passu
4. Affixing Unique Document Identification Number (UDIN) to the security
cover certificates:
The security cover certificates as required under the provisions of this Master
Circular shall contain, as applicable, the UDIN generated in the manner
prescribed by the relevant regulatory authority.
5. Qualifications/ disclaimers in security cover certificates:
The Debenture Trustee shall ensure that the qualifications/ disclaimer (by
whatever name called), does not impair the rights of holders of debt securities
in terms of security provided. Further, if the Debenture Trustee is of the
opinion that such qualifications/ disclaimer are affecting the rights of holders
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of debt securities, the Debenture Trustee shall take corrective action in this
regard.
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Annex-VA
Format of Security Cover Certificate
Column B Colum n Colum n Colum n Column Column Colum Column Colum Column Column L Column Column N Column O
Column A
C i Dii Eiii Fiv Gv n Hvi Ivii n J K M
Exclusive Exclusive Pari- PariPassu Pari- Assets Elimination (Total Relate d to only those items covered by t his
Charge Charge Passu Charge Passu not (amount in C to certificate
Particulars Charge Charge offered negative H)
as )
Security
Assets Other debt Carrying Carrying
shared by assets on amount /book value value/book
Paripassu which considered for exclusive value for
debt there is more charge paripassu
Description
holder pari- than once assets where charge
of asset for Market
(includes Passu (due to Market market value assets where
which this Debt for Debt for Value
debt for charge exclusive Value for is not market value
certificate which which for
Other which (excluding plus, Assets ascertainable is not Total
relate this this Pari-
Secured this items paripassu charged or applicable ascertainable Value(=K+L+M+
certificate certificate passu
Debt certificate covered charge) on (For Eg. or applicable N)
being being charge
is issued in column Exclusive Bank (For Eg.
issued issued Assets
& F) basis Balance, Bank
viii
other DSRA, Balance,
debt market value DSRA,
with is not market value
paripassu applicable) is not
charge) applicable)
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Relating to Column F
Book Book Yes/ No Book Book
Value Value Value Value
ASSETS
Property,
Plant and
Equipment
Capital
Work-in
Progress
Right of
Use Assets
Goodwill
Intangible
Assets
Intangible
Assets under
Development
Investments
Loans
Inventories
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Trade
Receivables
Cash and
Cash
Equivalents
Bank
Balances
other than
Cash and
Cash
Equivalents
Others
Total
LIABILITIE S
Debt
securities to
which this
certificate
pertains
Other debt
sharing
paripassu
charge with
above
debt
Other Debt
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Subordinated
debt
Borrowings not to
be filled
Bank
Debt
Securities
Others
Trade
payables
Lease
Liabilities
Provisions
Others
Total
Cover on
Book
Value
Cover on
Market
Valueix
Exclusive Pari-
Security Passu
Cover Security
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Ratio Cover
Ratio
i. This column shall include book value of assets having exclusive charge and outstanding book value of debt for which this
certificate is issued.
ii. This column shall include book value of assets having exclusive charge and outstanding book value of all corresponding
debt other than column C.
iii. This column shall include debt for which this certificate is issued having any pari-passu charge - Mention Yes, else No.
iv. This column shall include a) book value of assets having pari-passu charge b) outstanding book value of debt for which
this certificate is issued and c) other debt sharing pari-passu charge along with debt for which certificate is issued.
v. This column shall include book value of all other assets having pari-passu charge and outstanding book value of
corresponding debt.
vi. This column shall include all those assets which are not charged and shall include all unsecured borrowings including
subordinated debt and shall include only those assets which are paid-for.
vii. In order to match the liability amount with financials, it is necessary to eliminate the debt which has been counted more
than once (included under exclusive charge column as also under pari-passu). On the assets side, there shall not be
elimination as there is no overlap.
viii. Assets which are considered at Market Value like Land, Building, Residential/ Commercial Real Estate to be stated at
Market Value. Other assets having charge to be stated at book value/Carrying Value.
ix. The market value shall be calculated as per the total value of assets mentioned in Column O.
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Chapter VI: Periodical/ Continuous Monitoring by Debenture Trustee
A Debenture Trustee shall undertake independent periodical assessment of
compliance with covenants or terms of the issue of listed debt securities.
1. Monitoring of security created/ assets on which charge is created
1.1. Chapter II of this Master Circular has prescribed the manner in which
Debenture Trustees shall carry out due diligence for creation of security at the
time of issuance of debt securities. As required under Regulation 15(1)(s) &
15(1)(t) of the DT Regulations, Debenture Trustee shall carry out due diligence
on continuous basis.
1.2. Towards this, the issuer and the Debenture Trustee shall ensure that the terms
and conditions relating to periodical monitoring are incorporated in the
debenture trust deed4. These terms and conditions shall, inter-alia, entail that
the Issuer shall provide relevant documents/ information within a considerable
timeline so as to enable the Debenture Trustee shall submit the following
reports/ certification to Stock Exchange within the timelines specified:
Reports/ Certificate Periodicity
Security cover Certificate (in the format as Quarterly basis within 75 days
specified in Annex-VA to this Master Circular) f rom end of each quarter except last
quarter when submission is to be
A statement of value of pledged securities made within 90 days.
A statement of value for Debt Service Reserve
Account or any other form of security offered
Net worth certificate of guarantor in case debt Half yearly basis within 75 days
securities are secured by way of personal from end of each half-year.
guarantee)
4 For existing debt securities as on November 12, 2020 vide circular
SEBI/HO/MIRSD/CRADT/CIR/P/2020/230, listed entities and debenture trustee(s) were given 120
days to enter into supplemental/amended debenture trust deed incorporating the changes in the
debenture trust deed
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Reports/ Certificate Periodicity
Financials/ value of guarantor prepared on Annual basis within 75 days from
basis of audited financial statement etc. of the end of each financial year.
guarantor(secured by way of corporate
guarantee)
Valuation report and title search report for the Once in three years within 75 days
immovable/ movable assets, as applicable. from the end of the financial year.
1.3. Further, in case of pari-passu charge, wherein multiple Debenture Trustees
are holding charge over the same assets, a lead Debenture Trustee may be
decided amongst the Debenture Trustees based upon the amount of the
charge each Debenture Trustees holds and accordingly the exercise of
carrying out the valuation and preparation of the valuation report may be
carried out by the lead Debenture Trustees.
2. Monitoring of covenants
2.1. On a quarterly basis, the Issuer shall furnish to the Debenture Trustee the
compliance status with respect to financial covenants of the listed debt
securities which shall be certified by the statutory auditor of the Issuer.
2.2. Regulation 15(f) of the DT Regulations mandates the Debenture Trustee to
monitor the breach of covenants. In order to ensure effective monitoring, a
Debenture Trustee shall:
a) Establish board approved internal policies with respect to proactive and
effective monitoring of breach of covenants and such policy shall inter-alia
include:
i. procedure of monitoring of breach of covenants; and
ii. clearly defined role and responsibilities of the employees engaged
in the process of monitoring of breach of covenants including
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delegation of authority with respect to the process of monitoring of
breach of covenants.
b) Formulate the category wise list of covenants applicable to the particular
issuance defining the frequency of each covenant to be monitored viz.
continuous, quarterly, half-yearly, annual etc. The covenants may be
categorized as financial covenants, affirmative covenants, negative
covenants etc. A guidance notes for the list of covenants prepared in
consultation with Debenture Trustees is enclosed as Annex-VIA of this
Master Circular.
c) Initiate action in case of breach of covenants viz. accelerated payment,
borrowing restriction, not to declare dividend before payment, declaration of
event of default, etc. in accordance with the terms of issue/ Offer Document/
Debenture Trust Deed.
d) Independently monitor any breach of covenants from continuous monitoring
of any public disclosure on Stock Exchange, company filings, news articles
in electronic/ print media or any information available in public domain apart
from periodical information/ documents submitted by the issuer.
e) Furnish a status report on its website and to the Stock Exchange for further
dissemination on a quarterly basis. Such status report shall contain the
covenants breached in the preceding quarter and the actions taken by the
Debenture Trustee for the same as per the format prescribed under Chapter
VI of this Master Circular.
3. Disclosures by Debenture Trustee:
3.1. In order to enhance transparency with respect to the no-objection certificate
(NOC)/ no-dues certificate/ consent/ permission (by whatever name called)
issued by the Debenture Trustee, it shall make the following disclosures to the
Stock Exchange:
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a) No-objection Certificate (NOC)/ no-dues certificate/ consent/ permission (by
whatever name called) issued by Debenture Trustee to the Issuer in terms
of contractual obligations arising out of offer document/ debenture trust deed
or any other transaction document related to debt securities, including the
consent/ NOC for further borrowing by issuer within two working days of
issuance of such consent/ no-objection certificate; and
b) Any breach of the minimum security cover within two working days of such
breach.
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Annex-VIA
Guidance note on list of Covenants
Sr. Category Sub-type (As applicable) Covenant (As applicable)
No.
1. Accounts/  Debt Service Reserve amount Covenant as to amount to be
funds/  Interest Service Reserve maintained, manner of creation
reserves Account and/ or funding of account, Date
maintained  Major maintenance reserve till required to be maintained or
 Escrow account/ RERA date on which to be created,
account manner of creation including
period for renewal,
 Debenture Redemption
replenishment, invocation
Reserve
(amount, date, period, etc.),
 Debenture Reserve Fund
manner of maintenance (ratio,
 Recovery Expense Fund
percentage etc.), bank account
 Account details
number (if applicable) etc.
 Any other Fund/ Account
2. Financial  Debt Service Coverage Ratio Covenant as to maintenance as
(DSCR) a ratio or percentage of ….
 Interest cover (state), Not less than/ Not
 Net Debt to EBITDA exceeding x, Time Bucket etc.
 Gross Debt to EBITDA
 Debt cap
 Debt Equity ratio
 Debt/ Tangible Net Worth
 Gross Non-Performing Assets
 PAR 90 and write off Net Non-
Performing Assets
 Tangible Net
Worth
 Debt to Value Ratio
 CAR (Capital Adequacy Ratio)
(Tier I CAR)
 Current Ratio
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 Dividend ratio (Dividend/ PAT)
 Liquidity
 Asset liability mismatch
 Any other ratio (state the ratio
and define the formula)
 Payment of Interest on due
dates
 Payment of principal on due
dates
3. Affirmative  Security Cover as per terms of Covenant as to Ratio or
Issue percentage, not less than, third
 Title of Security/asset party interest/ title, rentals,
negative lien, insurance, ROC
and CERSAI filing etc.
4. Affirmative or  Credit rating Covenant as to minimum rating
restrictive  Credit downgrade (Rating symbol), Standalone
basis, consolidated, CE/SO
rating, notch downgrade, etc.
5. Negative  Purpose/end-use Change in Key Managerial
 Change in nature and conduct Personnel (KMP), Auditor, Board
of business of Directors, shareholding,
 Change in management Fund restriction with amount, date till
raising/ borrowing/ which applicable, any change or
encumbrance restriction with specifics,
modification of charge/ creation
of further charge,
indebtedness/further investment
etc.
6. Default  Default of principal or interest Covenant as to extra interest
or both payable, cure period allowed,
 Security creation default investment allowed, additional
infusion required etc.
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Chapter VII: Disclosures on the website of a Debenture Trustee
1. Disclosure by Debenture Trustee on its website:
The Debenture Trustee shall make the following disclosures on its website as
specified below:
Disclosures Periodicity Format
Revision in Credit Continuous basis within T+1 Table 1 of Annex-VIIA
ratings day from receipt of information
Status of payment Table 2 of Annex-VIIA
of principal by the
Issuer interest
Monitoring of security Quarterly basis within 75 Table 3 of Annex-VIIA
cover certificate and days of end of each quarter
Quarterly compliance except last quarter when
report of the submission is to be made
Issuer. within 90 days
Details of Debenture Half-yearly basis within Table 4 of Annex-VIIA
issues handled by 75 days of the end of each
Debenture half-year
Trustee and their status
Status of information Table 5 of Annex-VIIA
regarding breach of
covenants/terms of the
issue, if any action
taken by debenture
trustee
Complaints received by Table 6 of Annex-VIIA
debenture trustee(s)
including default cases
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Disclosures Periodicity Format
Status regarding Annual basis within 75 days Table 7 of Annex-VIIA
maintenance of of the end of the financial year
accounts maintained
under supervision of
debenture trustee
Status of information Table 8 of Annex-VIIA
regarding any default by
the Issuer and action
taken by debenture
trustee
Monitoring of Table 3 of Annex-VIIA
Utilization
Certificate
2. Disclosure of compensation arrangement with clients by Debenture Trustee
on its websites:
A Debenture Trustee shall disclose the nature of compensation arrangement with
its clients on its website, including the minimum fee to be charged (in absolute
terms or as a percentage of the issue size) and factors determining the same.
3. Calendar of interest/ redemptions, due and paid, to be displayed on the
website of Debenture Trustee for the financial year:
3.1. A Debenture Trustee shall display on its website the ISIN wise details of
interest/ redemption due to the holders of listed debt securities in respect of all
issues during a financial year within five working days of start of financial year.
3.2. A Debenture Trustee shall also update such details for any new issue of debt
securities handled during the financial year within five days of closure of the
Issue.
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3.3. A Debenture Trustee shall also update the status of payment ISIN-wise against
such issuers not later than one day from the due date. In case the payment is
made with a delay by the issuer, Debenture Trustee shall update the calendar
specifying the date of such payment, with a remark ‘delayed payment’.
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Annex-VIIA
1. Revision in Credit ratings:
S. Name of the ISIN Immediate Previous Credit Rating Revised Credit Rating
No. listed entity Credit Date of Credit Credit Credit Date of Hyperlink of the press
Rating Rating Rating Rating Rating Review releases by the Credit
Agency Agency rating Agency
2. Status of payment of interest/principal by the listed entity:
S. Name of the ISIN Due Date of Actual date of Status of Payment Date of Date of Details of
No. listed entity Payment of Payment of (Default / Delayed information information action taken
Interest/ Interest/ / given to given to CRA by by
Principal Principal Non-Cooperation, Exchange by the the debenture debenture
No debenture trustee trustee, if
Information etc.) trustee any
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3. Monitoring of Utilization Certificate and Security Cover:
Name of Issue Issue Whether Periodical Utilization Certificate Security cover
the listed Type size (in Secured/ status/ Certificate
entity (Public/ ₹ Unsecured performance Date of Delay (if Security Security Date of Delay (if
(including Privately crores) reports/ receipt of any) & Cover cover ratio Security any in
ISIN ) placed Quarterly the reasons Certificate maintained cover submission)
listed) Compliance certificate (including provided by certificate & reasons
reports/ follow up (debenture (including
Financial done by trustee/ follow up
statements debenture statutory done by
submitted by trustee) auditor/other debenture
the pls specify) trustee)
listed entity
(Yes/No)
4. Details of Debenture issues handled by debenture trustee and their status:
Type Debenture issues at end of last half Debenture issues accepted during Debenture issues fully redeemed Debenture issues outstanding as on Cumulating
year ended March / Sep half year ended March / during half year last day of half year issues
20… Sep 20… ended March / Sep 20… ended March / Sep 20… handled up
to the half
year ended
March /
Sep 20…
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Secured Unsecured Total Secured Unsecured Total Secured Unsecured Total Secured Unsecured Total No. Amt.
No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt. No. Amt.
Public
Rights
Privately
Placed
Listed
Total
5. Status of information regarding breach of covenants/ terms of the issue, if any action taken by Debenture Trustee:
S. Name of Covenants Security to be Date of Date of Date of intimation Delay if any (in no. of Reasons Further
No. the Listed / terms of enforced due to actual detecting given to debenture days) for the action taken,
Entity issue (if breach of breach the breach holders, stock In In delay if any
(ISIN) any covenant/terms of by the exchanges, SEBI, detecting intimation
) breached issue including debenture etc. (if applicable) the breach
during the any revised due trustee
quarter date (if any)
6. Complaints received by Debenture Trustee including default cases:
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No. of pending No. of No. of complaints No. of complaints Nature of the Steps taken Remarks, if
Complaints at complaints resolved during pending at the Complaint(s) to resolve the any
the end of last received the half year end of half year Delay in Delay in Any pending
half year during the (within 30 days) (for more than 30 other payment complaints
half year days) payment of
of interest
redemption
7. Status regarding maintenance of accounts maintained under supervision of Debenture Trustee:
a. Debenture Redemption Reserve/ Debenture Redemption/ maintenance of funds as per Companies (Share Capital and
Debentures) Rules, 2014:
S. Name of the Issue Type of Issue Size ISIN (that is Amount Status of maintenance of DRR Details of
N Listed Entity Type entity (in ₹ crores) maturing in outstanding (15%/ 10% of the amount maturing action taken,
o. (Public/ (NBFC/ the current in the year, applicable as per if any
Privately HFC/FI/ FY) Companies
placed Other) (Share Capital and Debentures)
listed) Rules, 2014)
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b. Recovery expense fund
S. Name of the Type of Issue Issue Size/ Value Any addition in the Details of usage of the funds, if Additional
N Listed Entity (Public/ Size (in of recovery Recovery any, during the remarks
o. (including ISINs) Privately ₹ fund Expense fund during quarter
Placed) crores) maintained the quarter
c. Accounts/ funds to be maintained in case of Municipal Debt Securities:
S. Name of the Type of Issue Issue Size Size/ Value of Fund/account maintained Action taken by
No. Listed Entity (Public/ Privately (in ₹ debenture trustee, if any
Placed) crores) (in case of shortfall etc.)
No lien Interest payment Sinking fund
escrow account account
account
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8. Status of information regarding any default by listed entity and action taken by Debenture Trustee
Name of Issue Issue Secured/ Default of Year Date of Result of the voting (receipt of Date of Date of Date and Date of
the listed Type size (in Unsecured interest/ of intimating/ consents), if applicable convening enforcement details of conclusion
entity (Public/ ₹ redemption default sending Negative Positive Other the of security any other of recovery
(including Privately crores) amount (1st/ notice to consent for consent consents, meeting (Filing with actions proceedings
ISIN) placed (Yes/ No) 2nd/ the enforcement for if any of DRT/ NCLT (Appointment
listed) along with 3rd/ debenture of security signing debenture as of
the amount ..) holders the ICA holders applicable) nominee
outstanding director,
joining
ICA, etc. )
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Chapter VIII: Provisions relating Debenture Trust Deed, Sharing and Dissemination of
Information by Debenture Trustee
1. Contents of Debenture Trust Deed:
Certain clauses that are included in the trust deed, limit or extinguish the obligations of
Debenture Trustee in relation to any rights or interests of holders of debt securities or are in
conflict with the provisions of the DT Regulations. Such clauses in the existing or new debenture
trust deed shall not be applicable and shall stand null and void.
2. Sharing of information regarding Issuer between Debenture Trustees and CRAs:
2.1. DT Regulations require the Debenture Trustees to share information regarding the Issuers
that are their clients, with CRAs. The purpose of the said requirement is to enable CRAs to
perform their obligations effectively.
2.2. Towards this, Debenture Trustees and CRAs shall share information including but not limited
to, as specified in Annex-VIIIA of this Master Circular, in respect of issues/ issuers which
would help them in effective discharge of their duties.
2.3. Debenture Trustees and CRAs shall assign designated email addresses for sending and
receiving such information and ensure appropriate action, if any, based on the information
received.
3. Monitoring of payment of Interest/ repayment of Principal and sharing of such
information with CRAs by Debenture Trustees:
3.1. Debenture Trustee shall have adequate systems to ascertain the status of payment of
interest/ repayment of principal by the Issuer on due dates in timely manner and efficiently
share such information with the CRAs which shall include the following:
3.1.1. The Debenture Trustee shall, at least seven days prior to the due date of payment of
interest/ repayment of principal, seek ISIN-wise information from Issuers regarding the
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status of payment of interest/ repayment of principal on or before the due date. While
seeking such information, the Debenture Trustee shall also intimate to CRAs.
3.1.2. If the Issuer confirms the status of such payment/ repayment or where no information
is received from the Issuer on or before the due date, the Debenture Trustee shall
accordingly provide ISIN-wise information to the CRAs latest by one day after such
due date which shall state the following:
a) Information about payment made on or before the due date or;
b) Information about delay/ default in payment or;
c) No information forthcoming from the Issuer on the payment status.
3.1.3. In cases where the CRAs have been informed as per point no. 3.1.2 above that no
information is forthcoming from the Issuer on the payment/ repayment status, the
Debenture Trustee shall update the payment/ repayment status to CRAs as and when
any such information is available with the Debenture Trustee.
3.2. The Debenture Trustee shall also ascertain the status of payment/ repayment by the Issuer
on the due dates from various independent sources available at its disposal which, inter alia,
include the websites of Stock Exchanges, holders of listed debt securities and quarterly
reports submitted by Issuer.
3.3. The Debenture Trustee in its communication to the Issuer as mentioned in point no. 3.1.1
above shall inform that non-furnishing of information regarding status of payment/ repayment
by due date or non-disclosure of information with respect to timely payment by the Issuer on
Stock Exchange website may be considered as suppression of material information and may
attract provisions of Section 12A of the Securities and Exchange Board of India Act, 1992
and SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market)
Regulations, 2003.
3.4. If no information regarding payment/ repayment by the Issuer is received by the Debenture
Trustee by due date or such information is not disclosed by the Issuer on the Stock Exchange
website, then, the Debenture Trustee shall make reference to SEBI accordingly and disclose
the non-availability of such information on its website. Failure to make such reference to
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SEBI and nondisclosure on the website shall be considered as aiding and abetting the Issuer
in suppression of material information and may attract provisions of Section 12A of the
Securities and Exchange Board of India Act, 1992 and SEBI (Prohibition of Fraudulent and
Unfair Trade Practices relating to Securities Market) Regulations, 2003.
4. Dissemination of Information on Listed Debt Securities:
The Debenture Trustee shall disclose the information to the holders of debt securities and the
general public by issuing a press release regarding default by Issuer to pay interest on listed
debt securities or redemption amount, failure to create a charge on the assets and revision of
rating assigned to the listed debt securities. Further, such information shall also be placed on
the website of the Debenture Trustee, the issuer and the stock exchanges. It is clarified that
such actions shall be taken by the Debenture Trustee promptly and in any case not later than
next day of the occurrence of such events.
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Annex-VIIIA
Sharing of information between Debenture Trustees and Credit Rating Agencies
1. Information from Credit Rating Agencies to Debenture Trustees:
a) Rating assigned/revised for debt securities along with the rationale for the same.
b) Press release, outstanding ratings etc. in respect of debt securities.
c) Non-cooperation by the issuers with respect to sharing necessary information for monitoring
the credit quality of the rated instrument with Credit Rating Agencies.
d) Press release and separate communication to Debenture Trustee on withdrawal of rating
post redemption of entire amount due towards.
2. Information from Debenture Trustees to Credit Rating Agencies:
a) Whether the asset in respect of which security has been created is free from any
encumbrance and adequate to ensure security cover for the debt securities or if there is any
breach of the terms of creation of the security. This information shall be shared on a half
yearly basis.
b) Funds transferred to Debenture Redemption Reserve (DRR), depletion of the DRR
/invocation of guarantee which could affect the payment of debt obligations. This information
shall be shared annually.
c) Details of redemption of the issue.
d) Any default committed including the default in payment of interest or redemption of debt or
delay in creation of security.
e) Any change or restructuring of the terms of the issue.
f) Periodic reports from lead banks about the progress of the project for which funds have been
raised through debentures and certificate from issuer's auditors in respect of utilization of
funds.
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g) Details of grievances filed by debenture-holders and action taken to resolve them.
h) Non-cooperation by the issuer with respect to furnishing required reports/ certificates/
information.
Information pertaining to points c to h shall be shared on receipt.
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Chapter IX: Redress of Investors’ Grievances
The primary obligation on resolution of complaints is that of the issuer. The dispute resolution
mechanism administered by stock exchanges covers such listed companies and the holders of debt
securities.
1. Investor Charter:
1.1. In order to facilitate investor awareness about various activities where an investor has to
deal with Debenture Trustees for availing various services, SEBI has developed an Investor
Charter for Debenture Trustees, inter-alia detailing the services provided to Investors,
timelines for various Debenture Trustee services provided, Rights and Obligations of
Investors and Grievance Redress Mechanism.
1.2. In this regard, all the registered Debenture Trustees shall take necessary steps to bring the
Investor Charter, as provided at Annex–IXA of this Master Circular to the notice of investors
by way of:
a) disseminating the Investor Charter on their websites/through e-mail;
b) displaying the Investor charter at prominent places in offices etc.
1.3. Trustee Association of India (TAI) shall also disseminate the Investor Charter on its website.
1.4. Additionally, in order to bring about transparency in the Investor Grievance Redress
Mechanism, it has been decided that all the registered Debenture Trustees shall disclose on
their respective websites, the data on complaints received against them or in respect of debt
securities issues dealt by them and redress thereof, latest by seventh of the succeeding
month, as per the format enclosed at Annex-IXB to this Master Circular.
2. Exclusive e-mail ID to redress of Investor Complaints:
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In order to address the issue of having a direct and quicker forum for enabling investors to
register their complaints expeditiously, a Debenture Trustee shall designate an e-mail ID of the
grievance redress division/ compliance officer exclusively for the purpose of registering
complaints by investors. It shall display the email ID and other relevant details prominently on its
website and in the various materials/ pamphlets/ advertisement campaigns initiated by it for
creating investor awareness.
3. Redress of investor grievances through SEBI Complaints Redress System
(SCORES) platform:
3.1. The Debenture Trustee shall send its details, in the format specified in Annex-IXC of this
Master Circular to SEBI in hard copy and by email to scores@sebi.gov.in and obtain
SCORES user id and password immediately within a period of one month from the date of
registration. The email-id to be furnished by the Debenture Trustee for receiving SCORES
user id and password from SEBI has to be preferably a corporate email id and necessarily a
permanent one. Failure by any SEBI registered Debenture Trustees to obtain the SCORES
user ID and password would not only be deemed as non-redress of investor grievances but
also indicate wilful avoidance of the same.
3.2. The Debenture Trustee shall submit the details in hard copy (Annex-IXC) to the Department/
Division of SEBI which has granted them registration to operate in the securities market.
SCORES user id and password of the Debenture Trustee shall be created only after
receiving approval from the concerned Department/ Division of SEBI.
3.3. The Debenture Trustee shall review its investors’ grievances redress mechanism so as to
further strengthen it and correct the existing shortcomings, if any. The SEBI registered
Debenture Trustee to whom a complaint is forwarded through SCORES, shall take
immediate efforts on receipt of a complaint, for its resolution, within thirty days. The SEBI
registered Debenture Trustee shall keep the complainant duly informed of the action taken
thereon.
3.4. The Debenture Trustee shall update the ATR along with supporting documents, if any,
electronically in SCORES. ATR in physical form need not be sent to SEBI. The proof of
dispatch of the reply of the SEBI registered Debenture Trustee to the concerned investor
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should also be uploaded in SCORES and preserved by the SEBI registered Debenture
Trustee, for future reference.
3.5. Action taken by a Debenture Trustee will not be considered as complete if the relevant
details/ supporting documents are not uploaded in SCORES and consequently, the
complaints will be treated as pending.
3.6. A complaint shall be treated as resolved/ disposed/ closed only when SEBI disposes/ closes
the complaint in SCORES. Hence, mere filing of ATR by a Debenture Trustee with respect
to a complaint will not mean that the complaint is not pending against them.
3.7. Failure by a Debenture Trustee to file ATR under SCORES within thirty days of date of
receipt of the grievance shall not only be treated as failure to furnish information to SEBI but
shall also be deemed to constitute non-redress of investor grievance.
4. Dissemination of Information regarding Grievance Redress Mechanism:
For information of all investors who deal/ invest/ transact in the market, the following shall be
prominently displayed in the offices of Debenture Trustees:
Dear Investor,
In case of any grievance / complaint against the Intermediary:
Please contact Compliance Officer of the Intermediary (Name and Address) / email-id
(xxx.@email.com) and Phone No. - 91- XXXXXXXXXX.
You may also approach CEO / Partner / Proprietor (Name) / email id (xxx.@email.com) and
Phone No. - 91-XXXXXXXXXX.
If not satisfied with the response of the intermediary, you can lodge your grievances with SEBI
at http://scores.gov.in or you may also write to any of the offices of SEBI. For any queries,
feedback or assistance, please contact SEBI
Office on Toll Free Helpline at 1800 22 7575 / 1800 266 7575
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Annex–IXA
INVESTOR CHARTER – DEBENTURE TRUSTEES
1. Vision and Mission Statement for Investors
Vision:
• Strive to protect the interest of investors in debt securities by acting as a trusted Debenture
Trusteeship service provider.
Mission:
• To safeguard the interests of the investors in listed debt securities through adherence to
regulatory guidelines.
• To achieve highest level of operational efficiencies through well-defined internal processes
and domain expertise.
2. Details of services provided by Debenture Trustee:
• Facilitating documentation, exercising due diligence and timely creation of security for
debt securities.
• Ensuring creation of securities by the Issuer and holding of security including safe
custody of documents.
• Monitoring of payment of interest/ redemption of principal.
• Monitoring security cover and other financial covenants.
• Dissemination of rating revision/ payment of interest/ redemption information by
disclosing on Trustee’s website/ with Credit Rating Agencies/ Stock Exchanges Timely
and Effective resolution of investor complaints.
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• Ascertain that the debentures have been converted or redeemed in accordance with the
conditions under which they were offered to the investors.
• Enforcement of security as per terms of issue/ regulatory guidelines.
• Appoint a nominee director on the Board of the Issuer in case of event of default.
• Exercise due diligence to ensure compliance with the provisions of the Companies Act,
2013, the SEBI Regulations and the debenture trust deed by the Issuer.
3. Guidance pertaining to timelines for various services provided:
Timeline
S.
Type of Activity/ Service (within no. of
No.
days)
Disclosure by Debenture Trustee on Website or Stock Exchanges, as
1.
applicable
On continuous basis
a. Revision in Credit ratings of debt securities 1
b. Status of payment of interest/ repayment of principal by the Issuer 1
On quarterly basis
Monitoring of Security Cover Certificate for secured debt listed debt
a. 75/90
securities
b. Statement of value of pledged securities to Stock Exchange 75/90
c. Status of Quarterly compliance report submitted by the Issuer 75/90
On half yearly basis
Details of issuances of listed debt securities handled by Debenture
a. 75
Trustee and their status
Status of information regarding breach of covenants/ terms of the
b. 75
issue, if any action taken by debenture trustee
Complaints received by debenture trustee(s) including default
c. 75
cases
Net worth certificate of guarantor to stock exchange (in case
d. 75
listed debt securities are secured by way of personal guarantee)
On annual basis
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Timeline
S.
Type of Activity/ Service (within no. of
No.
days)
Financials/value of guarantor prepared on basis of audited
a. financial statement etc. of the guarantor(in case listed debt 75
securities are secured by way of corporate guarantee)
Status regarding maintenance of accounts maintained under
b. 75
supervision of debenture trustee
Status of information regarding any default by the Issuer and action
c. 75
taken by debenture trustee
d. Utilization Certificate submitted by the Issuer 75
Once in three years
Valuation report and title search report for the immovable/movable
a. 75
assets, if any.
2. Other services/activities
a. Providing copy of debenture trust deed to investor 7
b. Redress of Investor Grievances by Debenture Trustee 30
Notice to be issued by Debenture Trustees in case of change in
c. terms of debt securities including rollover, redemption of debt 15
securities etc.
4. Guidance pertaining to special circumstances:
BREACH OF COVENANT AND/OR EVENT OF DEFAULT
The Debenture Trustee shall take following steps in case of breach of covenants or terms of
issue and/or event of default:
a) send a notice to the investors within 3 days of breach of covenants or terms of issue and/or
event of default.
b) convene the meeting of investors within 30 days of breach of covenants or terms of issue
and/or event of default.
c) to enforce security or enter into the Inter Creditor Agreement or as decided in the meeting
of investors.
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5. Rights and Obligations of Investors:
Investor Right – Right to:
a) Inspect debenture trust deed, to obtain copy of debenture trust deed and related
documents as per prevailing state stamp laws.
b) Receive notice of any change in terms of debt securities including rollover, redemption
etc. or of breach of covenants and/ or event of default from debenture trustees.
c) of compromise or arrangement, to sanction any variation in the rights of the investors and
to sanction any compromise or arrangement proposed to be made between the Issuer
and investor(s).
d) Call for a meeting to be convened by the debenture trustee on requisition in writing signed
by investors holding at least 1/10th in value of the debentures for the time being
outstanding.
e) To lodge complaints with respect to their debt securities including non-receipt of interest
and or principal etc. with Debenture Trustee.
f) Receive information from Issuers as per SEBI Regulations and Companies Act, 2013.
Investor Obligations – under obligation to:
a) Read the information memorandum and debenture trust deed carefully before taking
investment decision.
b) Keep updated record with Depository Participant including bank details, address, email
ID of first holder, PAN etc. at all times.
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c) Keep themselves updated with all information on public domain such as, debenture
trustee website, Stock Exchange, India bond Info etc. and any other platform introduced
from time to time.
d) Participate in the meeting called by the Debenture Trustee.
e) Cooperate with debenture trustee and provide information to debenture trustee.
f) Respond to debenture trustee’s requests/ letters/ notices with clear and specific mandate
within the time period specified in the letter/ notice by the debenture trustee.
6. Details of grievance redress mechanism:
6.1 Investor shall check the website of debenture trustees for the dedicated grievance email
ID and other relevant details of the grievance redress division/compliance officer for the
purpose of registering grievances/ complaints and any enquiry.
6.2 For lodging the grievance, the investor can write to the debenture trustee’s dedicated
grievance email ids or letter or can directly lodge complaints on the link provided by
Debenture Trustee on its website.
6.3 While lodging a complaint it is necessary for investor to mention following:
a) Nature of Complaint
b) Name of Issuer Company
c) Holding details including ISIN
d) Full Name of Debenture Holder
e) PAN
f) Correct Email ID
6.4 Upon receipt of the complaint, the Debenture Trustee after due verification shall send
intimation of redress/ resolution of complaint via email / letter as applicable within the
timeline.
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6.5 In case a complaint is required to be escalated to the issuer by the debenture trustee, the
same shall be escalated within seven days of receipt of complaint.
6.6 If the investor is not satisfied with the redress/resolution of the complaint by the debenture
trustee, or the issuer, investor can lodge the complaint on the SEBI Complaints Redress
System - SCORES (https://scores.gov.in/) or harness the dispute resolution mechanism
specified by SEBI from time to time with respect to the Issuer.
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Annex-IXB
Data of complaints against Debenture Trustee to be displayed on its website- Format for
disclosing of data of complaints on its website:
1. Data for the month ending:
S. Received Carried Received Total Resol Pending at the Average
No. from forward during the Pending ved* end of the Resoluti
from month # month** on time^
previous (in days)
month
Pendin Pendin
g for g for
less more
than 3 than 3
month month
s s
1 Directly
from
Investors
2 SEBI
(SCORES)
3 Stock
Exchange
s (if
relevant)
4 Other
Sources (if
any)
5 Grand
Total
*Should include complaints of previous months resolved in the current month, if any.
**Should include total complaints pending as on the last day of the month, if any. ^Average resolution time is the sum
total of time taken to resolve each complaint in the current month divided by total number of complaints resolved in the
current month.
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2. Month – wise complaints data on half yearly basis:
S Month Carried Received Resolved Pending
No. forward from
previous
month
1 July, 2021
2 August, 2021
3 September, 2021
4 October, 2021
5 November, 2021
6 December, 2021
Grand Total
3. Trend of annual (Financial Year) disposal of complaints (for 5 years on rolling basis):
S No. Year Carried forward Received Resolved Pending
from previous year
1 2017-18
2 2018-19
3 2019-20
4 2020-21
5 2021-22
Grand Total
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Annex-IXC
AUTHENTICATION FOR SCORES BY SEBI REGISTERED DEBENTURE TRUSTEE
1. Name of SEBI registered Debenture Trustee:
2. Nature of registered intermediary:
3. SEBI registration no.
4. PAN of SEBI registered Debenture Trustee:
5. Date of SEBI registration of Debenture Trustee
6. SEBI registration valid up to:
7. Office address of the intermediary:
8. The details of the concerned person of the Debenture Trustee to whom User id and password
will be sent:
Name:
Designation:
Email id: (corporate and permanent email id) Mobile no.
Telephone No.:
Fax No.:
Place: Signature:
Date: Name:
Designation:
Seal:
Note: A scanned copy to be sent by email to scores@sebi.gov.in followed by hard copy to the concerned
Department/Division of Securities and Exchange Board of India, Plot No. C4-A, 'G' Block, Bandra Kurla
Complex, Mumbai -400 051
Important: Please note that SCORES has the provision for updating SEBI registered Debenture Trustee's
details by the intermediary itself. Any field (except the e-mail id which is permanent) such as registered office
address, name/details of the compliance officer, telephone numbers, etc. should be changed by the SEBI
registered Debenture Trustee immediately when warranted.
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Chapter X: Breach of Covenants, Default and Remedies
1. Event of default:
1.1. Regulation 51 read with the Explanation to Clause A (11) in Part B of Schedule III of the
LODR Regulations defines ‘default’ as non-payment of interest or principal amount in full on
the pre-agreed date which shall be recognized at the first instance of delay in the servicing
of any interest or principal on debt.
1.2. In the manner of calling ‘event of default’, due to the presence of multiple ISINs which may
have been issued under the same offer document or a single ISIN which may have been
split across multiple offer documents it is clarified that ‘event of default’ shall be reckoned at
the ISIN level, as all terms and conditions of issuance of security are same under a single
ISIN even though it might have been issued under multiple offer documents.
2. Appointment of Director nominated by the Debenture Trustee on boards of issuers:
2.1. Regulation 23(6) of the NCS Regulations obligates an issuer which is a company under the
Companies Act, 2013 to ensure that its Articles of Association requires its Board of Directors
to appoint as director, the person nominated by the debenture trustee(s) in terms of clause
(e) of sub-regulation (1) of regulation 15 of the SEBI (Debenture Trustees) Regulations,
1993.
2.2. Issuers other than those mentioned in para 2.1 above shall submit an undertaking to their
Debenture Trustees that in case of events as mentioned in Regulation 15(1)(e) of SEBI
(Debenture Trustees) Regulations, 1993, a non-executive / independent director / trustee /
member of its governing body shall be designated as nominee director for the purposes of
Regulation 23(6) of the NCS Regulations, in consultation with the Debenture Trustee, or, in
case of multiple Debenture Trustees, in consultation with all the Debenture Trustees.
3. Process of convening meeting of holders of debt securities and consent of investors for
enforcement of security and for signing the Inter Creditor Agreement (ICA):
3.1. The Reserve Bank of India (“RBI”), vide Circular dated June 07, 2019, issued the Reserve
Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions 2019
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which inter alia specified the mechanism for resolution of stressed assets by Lenders [viz.
Scheduled Commercial Banks, All-India Term Financial Institutions, Small Finance Banks,
Systemically Important Non-Deposit Taking Non-Banking Finance Companies (NBFCs) as
well as Deposit Taking NBFCs].In terms thereof, investors in debt securities, being financial
creditors, are approached by other lenders to sign an agreement, referred to as the ICA,
under specific terms detailed in the framework as stipulated by RBI.
3.2. Regulation 59 of the LODR Regulations provides that material modification in the structure
of debt securities shall be made only after obtaining the consent of the requisite majority of
investors. Regulation 39 of the NCS Regulations, applicable in case of public issue of debt
securities, stipulates a period of fifteen days for giving notice in case of roll-over of debt
securities and further provides for approval to be obtained from not less than three-fourth of
the holders by value of such debt securities.
3.3. As the resolution plan in the ICA may involve restructuring including roll-over of debt
securities, requiring the consent of the investors, the process to be followed for seeking
consent for enforcement of security and/or entering into an ICA shall be as under:
3.3.1. The Debenture Trustee shall send a notice to the investors within three days of the
event of default by registered post/ acknowledgement due or speed post/
acknowledgement due or courier or hand delivery with proof of delivery as also through
email as a text or as an attachment to email with a notification including a read receipt,
and proof of dispatch of such notice or email, shall be maintained.
3.3.2. The notice shall contain the following:
a) A provision for negative consent for proceeding with the enforcement of security;
and
b) A provision for positive consent for signing the ICA (in case the Debenture Trustee
is approached by other lenders for signing/ joining the ICA); and
c) the time period within which the consent needs to be provided, viz. consent to be
given within 15 days from the date of notice; and
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d) the date of meeting to be convened.
e) A disclosure to the effect that in case requisite consents are not received either for
enforcement of security or for signing ICA, then the Debenture Trustee shall take
further action, if any, as per the decision taken in the meeting of the holders of
listed debt securities.
3.3.3. Debenture Trustee shall convene the meeting of holders of listed debt securities within
30 days of the event of default:
Provided that in case the default is cured between the date of notice and the date of
meeting, then the convening of such a meeting may be dispensed with.
3.3.4. In view of Regulation 15(2)(b) of SEBI (Debenture Trustees) Regulations, 1993, in
case of debt securities issued by way of public issue, the notice sent by the Debenture
Trustee shall not contain the consent as per paragraph 3.3.2.a) and the requirement
to convene a meeting for enforcement of security, as per paragraph 3.3.3, shall not be
applicable.
3.3.5. The Debenture Trustee shall take necessary action to enforce security or enter into
the ICA or as decided in the meeting of investors, subject to the following:
a) In case(s) where the majority of holders of listed debt securities express dissent,
i.e. against enforcement of the security, the DEBENTURE TRUSTEE shall not
enforce security.
b) In case(s) where majority of holders of listed debt securities express consent, i.e.
to enter into the ICA, the Debenture Trustee shall enter into the ICA.
c) In case requisite consents are not received either for enforcement of security or
for signing ICA, then the Debenture Trustee shall take further action, if any, as per
the decision taken in the meeting of the holders of listed debt securities.
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d) The Debenture Trustee may form a representative committee of the holders of
listed debt securities to participate in the ICA or to enforce the security or as may
be decided in the meeting.
3.3.6. The consent of the majority of holders of listed debt securities shall mean the approval
of not less than 75% of the holders of listed debt securities by value of the outstanding
debt and 60% of the holders of listed debt securities by number at the ISIN level.
4. Conditions for signing of ICA by Debenture Trustee on behalf of holders of listed debt
securities
4.1. The Debenture Trustee(s) may sign the ICA and consider the resolution plan on behalf of
the holders of listed debt securities upon compliance with the following conditions:
a) The signing of the ICA and agreeing to the resolution plan is in the interest of holders of
listed debt securities and in compliance with the Companies Act, 2013 and the rules made
thereunder, the Securities Contracts (Regulations) Act, 1956 and the Securities and
Exchange Board of India Act, 1992 and the rules, regulations and circulars issued
thereunder from time to time.
b) If the resolution plan imposes conditions on the Debenture Trustee that are not in
accordance with the provisions of Companies Act, 2013 and the rules made thereunder,
the Securities Contracts (Regulations) Act, 1956 and the Securities and Exchange Board
of India Act, 1992 and the rules, regulations and circulars issued thereunder from time to
time, then the Debenture Trustee shall be free to exit the ICA altogether with the same
rights as if it had never signed the ICA. Under these circumstances, the resolution plan
shall not be binding on the Debenture Trustee(s).
c) The resolution plan shall be finalized within 180 days from the end of the review period.
If the resolution plan is not finalized within 180 days from the end of the review period,
then the Debenture Trustee shall be free to exit the ICA altogether with the same rights
as if it had never signed the ICA and the resolution plan shall not be binding on the
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Debenture Trustee. However, if the finalization of the resolution plan extends beyond 180
days, the Debenture Trustee may consent to an extension beyond 180 days subject to
the approval of the investors regarding the total timeline. The total timeline shall not
exceed 365 days from the date of commencement of the review period.
d) If any of the approved Resolution Plan are contravened by any of the signatories to the
ICA, the Debenture Trustee shall be free to exit the ICA and seek appropriate legal
recourse or any other action as deemed fit in the interest of the investors.
4.2. The Debenture Trustee shall ensure that the conditions mentioned in paragraphs 4.1 (b), (c)
and (d) are suitably incorporated in the ICA, before signing of the ICA.
5. Action to be taken in case of breach of covenants or terms of issue
In case of breach of covenants or terms of the issue by the Issuer, the Debenture Trustee shall
take steps as outlined in paragraphs 3.3.1 and 3.3.3 of this chapter and thereafter take necessary
action as decided in the meeting of holders of debt securities in this regard.
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Chapter XI: Operational framework for transactions in defaulted debt securities post
maturity date/ redemption date
The operational framework for transactions in defaulted debt securities (debt securities where
redemption amount has not been paid on maturity/ redemption date) has been outlined in Chapter
XI of the NCS operational circular. The obligations of Debenture Trustee arising out of the same
has been outlined below:
1. Role of Debenture Trustee:
1.1. In case the Issuer fails to intimate the status of payment of the debt securities within
stipulated timelines, then Debenture Trustee shall seek status of payment from the issuer
and/ or conduct independent assessment (from banks, investors, rating agencies, etc.) to
determine the same. Based on such assessment, Debenture Trustee shall intimate Stock
Exchange and Depositories the status of payment of debt securities within nine working days
of the maturity/ redemption date.
1.2. In case intimation of the status of payment of debt securities is not received by Stock
Exchanges and Depositories within stipulated timeline, transactions in such debt securities
shall continue to be restricted and such restrictions shall continue until any further intimation
is received from Issuer/ Debenture Trustee regarding the status of payment of such debt
securities.
2. Continuous assessment of default status:
2.1. In case the Issuer fails to intimate the updated status of payment of the concerned debt
securities within the stipulated timelines, the Debenture Trustee shall carry independent
assessment as given at paragraph 1 above and intimate the status of payment of debt
securities to the Stock Exchange and Depositories by the seventh working day of April of
each financial year.
2.2. In case of any developments that impact the status of default of the debt securities (including
restructuring of debt securities, NCLT/ NCLAT proceedings relating to insolvency/
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bankruptcy, repayment, etc.), the Issuer/ Debenture Trustee shall intimate the Stock
Exchanges and Depositories within one working day of such development.
2.3. The process explained above shall be followed either till full payment on these securities is
made by the Issuer or the Issuer has been liquidated and money has been realised after
completion of recovery proceedings.
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Chapter XII: Centralised Database - Responsibilities of Debenture Trustee
Debenture Trustee shall access the database to verify the information regarding default history and
other relevant information. In case of any discrepancy, Debenture Trustee shall notify the same to
Stock Exchanges and update the correct information in the database, within the time stipulated
below-
Activity Timelines
Verification and updating of default history information Within seven days knowledge of default
about the instrument/ issuer, as applicable in the database
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Chapter XIII: Reporting of regulatory compliance
1. The Debenture Trustee shall furnish periodical reports to SEBI in the following manner:
Report Periodicity Format
Half yearly compliance report Annex-XIIIA
Details of other activities carried out Half-yearly basis within -
by Debenture Trustee(s) including 75 days of the end of
type of activity, description of each half-year
activity etc.
Risk-Based Supervision report -
2. The half-yearly compliance report shall be reviewed by the Board of Directors of the
Debenture Trustee prior to the submission to SEBI.
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Annex-XIIIA
COMPLIANCE CERTIFICATE FOR THE HALF YEAR ENDED SEPTEMBER/ MARCH 20..
a) No conflict of interests with other activities:
The activities other than debenture trusteeship performed by Debenture Trustee are not in conflict
with Debenture Trustee activities and appropriate systems and policies have been put in place to
protect the interests of debenture holders.
b) Change in status or constitution:
Reporting of changes in status or constitution' of Debenture Trustee including the following:
i. Amalgamation, demerger, consolidation or any other kind of corporate restructuring
falling within the scope of section 391 of the Companies Act, 1956 (1 of 1956) or the
corresponding provision of any other law for the time being in force
ii. Change in Director, including managing director/ whole-time director
iii. Change in shareholding not resulting in change in control
If there is no change during the relevant quarter, it shall be indicated in the report.
c) Other Information:
i. Details of arrest /conviction of key officials of Debenture Trustee
ii. Details of prosecution cases or criminal complaints filed by investors against the Debenture
Trustee
iii. Details of any fraudulent activity by the employees associated with
Debenture Trustee activities and action taken by the Debenture Trustee
iv. Details of conviction of any offence involving moral turpitude or any economic offence by
employees of Debenture Trustee
v. Action taken by the Debenture Trustee on the above issues
d) Compliance with registration requirements:
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Certified that the requirements specified for SEBI registration as Debenture Trustee are fulfilled, the
details are as under:
i. Net worth (audited) as defined in the Regulations as on FY ended ………
(as per the latest audited financials)
ii. Any change in infrastructure since the last report/ registration/ renewal
iii. Changes in Key personnel during the half year ended……….)
Name(s) of the Appointment / Date of Qualification Experience
key personnel Cessation appointment /
cessation
e) Details of deficiencies and non-compliances
f) Details of the review of the report by the Board of Directors:
i. Date of Board Review (DD/MM/YYYY)
ii. Observation of the Board of Directors on the deficiencies and non-compliances and corrective
measures initiated
, C ertified that we have complied with SEBI (Debenture Trustee) Regulations, 1993 applicable
provisions of SEBI (Issue and Listing of Non-convertible Securities) Regulations, 2021,
Circulars issued by SEBI and any other laws applicable from time to time, other than the
deficiencies and non-compliances reported by us at Section(e) above.
Name of Compliance Officer
Email ID
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Chapter XIV: Guidelines on Outsourcing of Activities by Debenture Trustee
1. DT Regulations requires Debenture Trustees to render high standards of service and exercise
due diligence and ensure proper care in its operations. It has been observed that often
intermediaries resort to outsourcing with a view to reduce costs, and at times, for strategic
reasons.
2. Outsourcing may be defined as the use of one or more than one third party – either within or
outside the group - by a registered intermediary to perform the activities associated with services
which the intermediary offers.
3. The principles for outsourcing to be followed by Debenture Trustee are specified at Annex-XIVA
of this Master Circular.
4. A Debenture Trustee desirous of outsourcing its activities shall not, outsource its core business
activities and compliance functions.
5. The Debenture Trustee shall comply with the provisions of SEBI {KYC (Know Your Client)
Registration Agency} Regulations, 2011 and guidelines issued thereunder from time to time.
6. The Debenture Trustee shall be responsible for reporting of any suspicious transactions/ reports
to FIU or any other competent authority in respect of activities carried out by the third parties.
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Annex-XIVA
PRINCIPLES OF OUTSOURCING FOR DEBENTURE TRUSTEES
1. A Debenture Trustee seeking to outsource activities shall have in place a
comprehensive policy to guide the assessment of whether and how those activities can
be appropriately outsourced. The Board/ partners (as the case may be) {hereinafter
referred to as the “the Board”} of the intermediary shall have the responsibility for the
outsourcing policy and related overall responsibility for activities undertaken under
that policy.
1.1 The policy shall cover activities or the nature of activities that can be outsourced, the
authorities who can approve outsourcing of such activities, and the selection of third party
to whom it can be outsourced. For example, an activity shall not be outsourced if it would
impair the supervisory authority’s right to assess, or its ability to supervise the business of
the Debenture Trustee. The policy shall be based on an evaluation of risk concentrations,
limits on the acceptable overall level of outsourced activities, risks arising from outsourcing
multiple activities to the same entity, etc.
1.2 The Board shall mandate a regular review of outsourcing policy for such activities in the
wake of changing business environment. It shall also have overall responsibility for
ensuring that all ongoing outsourcing decisions taken by the Debenture Trustee and the
activities undertaken by the third-party, are in keeping with its outsourcing policy.
2. The Debenture Trustee shall establish a comprehensive outsourcing risk management
programme to address the outsourced activities and the relationship with the third
party.
2.1 A Debenture Trustee shall make an assessment of outsourcing risk which depends on
several factors, including the scope and materiality of the outsourced activity, etc. The
factors that could help in considering materiality in a risk management programme include-
a) The impact of failure of a third party to adequately perform the activity on the financial,
reputational and operational performance of the Debenture Trustee and on the
investors/ clients;
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b) Ability of the Debenture Trustee to cope up with the work, in case of non-performance
or failure by a third party by having suitable back-up arrangements;
c) Regulatory status of the third party, including its fitness and probity status;
d) Situations involving conflict of interest between the Debenture Trustee and the third
party and the measures put in place by the Debenture Trustee to address such
potential conflicts, etc.
2.2 While there shall not be any prohibition on a group entity/ associate of the Debenture
Trustee to act as the third party, systems shall be put in place to have an arm’s length
distance between the Debenture Trustee and the third party in terms of infrastructure,
manpower, decision-making, record keeping, etc. for avoidance of potential conflict of
interests. Necessary disclosures in this regard shall be made as part of the contractual
agreement. It shall be kept in mind that the risk management practices expected to be
adopted by a Debenture Trustee while outsourcing to a related party or an associate would
be identical to those followed while outsourcing to an unrelated party.
2.3 The records relating to all activities outsourced shall be preserved centrally so that the
same is readily accessible for review by the Board of the Debenture Trustee and/or its
senior management, as and when needed. Such records shall be regularly updated and
may also form part of the corporate governance review by the management of the
Debenture Trustee.
2.4 Regular reviews by internal or external auditors of the outsourcing policies, risk
management system and requirements of the regulator shall be mandated by the Board
wherever felt necessary. The Debenture Trustee shall review the financial and operational
capabilities of the third party in order to assess its ability to continue to meet its outsourcing
obligations.
3. The Debenture Trustee shall ensure that outsourcing arrangements neither diminish its
ability to fulfill its obligations to customers and regulators, nor impede effective
supervision by the regulators.
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3.1 The Debenture Trustee shall be fully liable and accountable for the activities that are being
outsourced to the same extent as if the service were provided in-house.
3.2 Outsourcing arrangements shall not affect the rights of an investor or client against the
Debenture Trustee in any manner. The Debenture Trustee shall be liable to the investors
for the loss incurred by them due to the failure of the third party and also be responsible
for redress of the grievances received from investors arising out of activities rendered by
the third party.
3.3 The facilities/ premises/ data that are involved in carrying out the outsourced activity by
the service provider shall be deemed to be those of the registered Debenture Trustee.
The Debenture Trustee itself and Regulator or the persons authorized by it shall have the
right to access the same at any point of time.
3.4 Outsourcing arrangements shall not impair the ability of SEBI/ SRO or auditors to exercise
its regulatory responsibilities such as supervision/ inspection of the Debenture Trustee.
4. The Debenture Trustee shall conduct appropriate due diligence in selecting the third
party and in monitoring of its performance:
4.1 It is important that the Debenture Trustee exercises due care, skill, and diligence in the
selection of the third party to ensure that the third party has the ability and capacity to
undertake the provision of the service effectively.
4.2 The due diligence undertaken by an Debenture Trustee shall include assessment of:
a) third party’s resources and capabilities, including financial soundness, to perform the
outsourcing work within the timelines fixed;
b) compatibility of the practices and systems of the third party with the
Debenture Trustee’s requirements and objectives;
c) market feedback of the prospective third party’s business reputation and track record
of their services rendered in the past;
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d) level of concentration of the outsourced arrangements with a single third party; and
e) the environment of the foreign country where the third party is located.
5. Outsourcing relationships shall be governed by written contracts/ agreements/ terms
and conditions (as deemed appropriate) {hereinafter referred to as “contract”} that
clearly describe all material aspects of the outsourcing arrangement, including the
rights, responsibilities and expectations of the parties to the contract, client
confidentiality issues, termination procedures, etc.
5.1 Outsourcing arrangements shall be governed by a clearly defined and legally binding
written contract between the Debenture Trustee and each of the third parties, the nature
and detail of which shall be appropriate to the materiality of the outsourced activity in
relation to the ongoing business of the Debenture Trustee.
5.2 Care shall be taken to ensure that the outsourcing contract:
a) clearly defines what activities are going to be outsourced, including appropriate
service and performance levels;
b) provides for mutual rights, obligations and responsibilities of the Debenture Trustee
and the third party, including indemnity by the parties;
c) provides for the liability of the third party to the Debenture Trustee for unsatisfactory
performance/other breach of the contract;
d) provides for the continuous monitoring and assessment by the Debenture Trustee of
the third party so that any necessary corrective measures can be taken up
immediately, i.e., the contract shall enable the Debenture Trustee to retain an
appropriate level of control over the outsourcing and the right to intervene with
appropriate measures to meet legal and regulatory obligations;
e) includes, where necessary, conditions of sub-contracting by the third-party, i.e. the
contract shall enable Debenture Trustee to maintain a similar control over the risks
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When a third party outsources to further third parties as in the original direct outsourcing;
f) has unambiguous confidentiality clauses to ensure protection of proprietary and
customer data during the tenure of the contract and also after the expiry of the
contract;
g) specifies the responsibilities of the third party with respect to the IT security and
contingency plans, insurance cover, business continuity and disaster recovery plans,
force majeure clause, etc.;
h) provides for preservation of the documents and data by third party;
i) provides for the mechanisms to resolve disputes arising from implementation of the
outsourcing contract;
j) provides for termination of the contract, termination rights, transfer of information and
exit strategies;
k) addresses additional issues arising from country risks and potential obstacles in
exercising oversight and management of the arrangements when Debenture Trustee
outsources its activities to foreign third party. For example, the contract shall include
choice-of-law provisions and agreement covenants and jurisdictional covenants that
provide for adjudication of disputes between the parties under the laws of a specific
jurisdiction;
l) neither prevents nor impedes the Debenture Trustee from meeting its respective
regulatory obligations, nor the regulator from exercising its regulatory powers; and
m) provides for the Debenture Trustee and /or the regulator or the persons authorized by
it to have the ability to inspect, access all books, records and information relevant to
the outsourced activity with the third party.
6. The Debenture Trustee and its third parties shall establish and maintain contingency
plans, including a plan for disaster recovery and periodic testing of backup facilities.
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6.1 Specific contingency plans shall be separately developed for each outsourcing
arrangement, as is done in individual business lines.
6.2 A Debenture Trustee shall take appropriate steps to assess and address the potential
consequence of a business disruption or other problems at the third party level. Notably,
it shall consider contingency plans at the third party; coordination of contingency plans at
both the Debenture Trustee and the third party; and contingency plans of the Debenture
Trustee in the event of non-performance by the third party.
6.3 To ensure business continuity, robust information technology security is a necessity. A
breakdown in the IT capacity may impair the ability of the Debenture Trustee to fulfil its
obligations to other market participants/ clients/ regulators and could undermine the
privacy interests of its customers, harm the Debenture Trustee’s reputation, and may
ultimately impact on its overall operational risk profile. Intermediaries shall, therefore, seek
to ensure that third party maintains appropriate IT security and robust disaster recovery
capabilities.
6.4 Periodic tests of the critical security procedures and systems and review of the backup
facilities shall be undertaken by the Debenture Trustee to confirm the adequacy of the
third party’s systems.
7. The Debenture Trustee shall take appropriate steps to require that third parties protect
confidential information of both the Debenture Trustee and its customers from
intentional or inadvertent disclosure to unauthorized persons:
7.1 A Debenture Trustee that engages in outsourcing is expected to take appropriate steps to
protect its proprietary and confidential customer information and ensure that it is not
misused or misappropriated.
7.2 The Debenture Trustee shall prevail upon the third party to ensure that the employees of
the third party have limited access to the data handled and only on a “need to know” basis
and the third party shall have adequate checks and balances to ensure the same.
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7.3 In cases where the third party is providing similar services to multiple entities, the
Debenture Trustee shall ensure that adequate care is taken by the third party to build
safeguards for data security and confidentiality.
8. Potential risks posed where the outsourced activities of multiple intermediaries are
concentrated with a limited number of third parties.
In instances, where the third party acts as an outsourcing agent for multiple intermediaries, it
is the duty of the third party and the Debenture Trustee to ensure that strong safeguards are
put in place so that there is no co-mingling of information /documents, records and assets.
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Chapter XV: Unauthenticated news circulated by SEBI registered market intermediaries
through various modes of communication
1. It has been observed by SEBI that unauthenticated news related to various scrips are circulated
in blogs/ chat forums/ e-mail etc. by employees of Broking Houses/ Other Intermediaries without
adequate caution as mandated in the Code of Conduct.
2. Further, in various instances, it has been observed that the Intermediaries do not have proper
internal controls and do not ensure that proper checks and balances are in place to govern the
conduct of their employees. Due to lack of proper internal controls and poor training, employees
of such intermediaries are sometimes not aware of the damage which can be caused by
circulation of unauthenticated news or rumours. It is a well-established fact that market rumours
can do considerable damage to the normal functioning and behaviour of the market and distort
the price discovery mechanisms.
3. In view of the above, a Debenture Trustee shall ensure that:
3.1. Proper internal code of conduct and controls is put in place.
3.2. Employees/ temporary staff/ voluntary workers etc. employed/ working in the Offices of SEBI
registered Debenture Trustees do not encourage or circulate rumours or unverified
information obtained from client, industry, any trade or any other sources without verification.
3.3. Access to Blogs/ Chat forums/ Messenger sites etc. should either be restricted under
supervision or access should not be allowed.
3.4. Logs for any usage of such Blogs/ Chat forums/ Messenger sites (called by any
nomenclature) shall be treated as records and the same should be maintained as specified
by the respective Regulations which govern the concerned Debenture Trustee.
3.5. Employees should be directed that any market related news received by them either in their
official mail/ personal mail/ blog or in any other manner, should be forwarded only after the
same has been seen and approved by the concerned SEBI registered Debenture Trustee's
Compliance Officer. If an employee fails to do so, he/ she shall be deemed to have violated
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the various provisions contained in SEBI Act/ Rules/ Regulations etc. and shall be liable for
action. The Compliance Officer shall also be held liable for breach of duty in this regard.
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Chapter XVI: General Guidelines for dealing with Conflicts of Interest by Debenture
Trustee and its Associated Persons in Securities Market
1. All intermediaries, recognised stock exchanges, recognised clearing corporations and
depositories (hereinafter collectively referred to as "such entities") are presently governed by the
provisions for avoidance of conflict of interest as mandated in the respective regulations read
with relevant circulars issued from time to time by SEBI. On the lines of Principle 8 of the
International Organisation of Securities Commissions (IOSCO) Objectives and Principles of
Securities Regulations, it has been decided to put in place comprehensive guidelines to
collectively cover such entities and their associated persons, for elimination of their conflict of
interest, as detailed hereunder.
2. The Debenture Trustee shall adhere to these guidelines for avoiding or dealing with or managing
conflict of interest. It shall be responsible for educating its associated persons for compliance of
these guidelines.
3. For the purpose of these guidelines, "associated persons" have the same meaning as defined
in Securities and Exchange Board of India Certification of Associated Persons in the Securities
Markets) Regulations, 2007.
4. Debenture Trustee and its associated persons shall,
4.1. lay down, with active involvement of senior management, policies and internal procedures
to identify and avoid or to deal or manage actual or potential conflict of interest, develop an
internal code of conduct governing operations and formulate standards of appropriate
conduct in the performance of their activities, and ensure to communicate such policies,
procedures and code to all concerned;
4.2. at all times maintain high standards of integrity in the conduct of their business;
4.3. ensure fair treatment of their clients and not discriminate amongst them;
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4.4. ensure that their personal interest does not, at any time conflict with their duty to their clients
and client’s interest always takes primacy in their advice, investment decisions and
transactions;
4.5. make appropriate disclosure to the clients of possible source or potential areas of conflict
of interest which would impair their ability to render fair, objective and unbiased services;
4.6. endeavour to reduce opportunities for conflict through prescriptive measures such as
through information barriers to block or hinder the flow of information from one department/
unit to another, etc.;
4.7. place appropriate restrictions on transactions in securities while handling a mandate of
issuer or client in respect of such security so as to avoid any conflict;
4.8. not deal in securities while in possession of material non - published information
4.9. not to communicate the material non-published information while dealing in securities on
behalf of others
4.10. not in any way contribute to manipulate the demand for or supply of securities in the market
or to influence prices of securities;
4.11. not have an incentive structure that encourages sale of products not suiting the risk profile
of their clients;
4.12. not share information received from clients or pertaining to them, obtained as a result of
their dealings, for their personal interest;
5. The boards of the Debenture Trustee shall put in place systems for implementation of the
provisions of this chapter and provide necessary guidance enabling identification, elimination or
management of conflict of interest situations.
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6. The said guidelines shall be in addition to the provisions, if any, contained in respective
regulations/ circulars issued by the Board from time to time regarding dealing with conflict of
interest, in respect of Debenture Trustee.
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Chapter XVII: Registration with the FINNET 2.0 system of Financial Intelligence Unit –
India (FIU-India) 5
1. FIU-India, vide letter dated April 19, 2023, addressed to designated directors and principal
officers of Debenture Trustees, has specified guidelines including red flag indicators for
detecting suspicious transactions by the Debenture Trustees under Rule 7(3) of Prevention of
Money Laundering (Maintenance of Records) Rules, 2005.
2. It has been informed by FIU-India that:
2.1. all Reporting Entities falling under Debenture Trustee segment registered in FINNET 1.0
system of FIU-India are required to re-register themselves in FINNET 2.0 system/
module6 ; and
2.2. those reporting entities who have not yet registered themselves with FIU-India are
required to be registered in FINNET2.0 system/ module of FIU-India immediately in light
of the FATF mutual evaluation.
3. In view of the above, all the SEBI registered debenture trustees are advised to register/ re-
register themselves in FINNET 2.0 system of FIU-India as soon as possible.
5 SEBI Circular No. SEBI/HO/DDHS/DDHS-POD1/CIR/P/2023/67 dated May 09, 2023
6 FIN NET 2.0 is the new reporting platform of FIU-India; for more details please refer to the following website-
https://fiuindia.gov.in/files/misc/finnet2.html
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Glossary
Term Description
ATR Action Taken Report
Central Registry of Securitization Asset Reconstruction and
CERSAI
Security Interest
CIBIL Credit Information Bureau (India) Limited
CRA Credit Rating Agency
DLT Distributed Ledger Technology
DRR Debenture Redemption Reserve
DSRA Debt Service Reserve Account
DT Debenture Trustees
Securities and Exchange Board of India (Debenture
DT Regulations
Trustees) Regulations, 1993
DTD Debenture Trust Deed
Earnings Before Interest, Taxes, Depreciation, and
EBITDA
Amortisation
ERP Enterprise Resource Planning
FAR Fixed Asset Register
FIU Financial Intelligence Unit
IBBI Insolvency and Bankruptcy Board of India
ICA Inter Creditor Agreement
IM Information Memorandum
IMPS Immediate Mobile Payment Service
INR Indian National Rupee
IOSCO International Organisation of Securities Commissions
ISIN International Securities Identification Number
IU Information Utility
KYC Know Your Client
Securities and Exchange Board of India (Listing
LODR Regulations Obligations and Disclosure Requirements) Regulations
2015
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Term Description
Ministry of Corporate Affairs
MCA
MRR Minimum Required Reserve
NBFCs Non-Banking Finance Companies
NCLAT National Company Law Appellate Tribunal
NCLT National Company Law Tribunal
Securities and Exchange Board of India (Issue and
NCS Regulations
Listing of Non-Convertible Securities) Regulations, 2021
NEFT National Electronic Funds Transfer
NOC No Objection Certificate
OD Offer Document
PAN Permanent Account Number
PM Placement Memorandum
PPM Preliminary Placement Memorandum
RBI Reserve Bank of India
REF Recovery Expenses Fund
ROC Registrar of Companies
RTGS Real-Time Gross Settlement
SCORES SEBI Complaints Redress System
SCRA Securities Contracts (Regulation) Act, 1956
SEBI Securities and Exchange Board of India
SRO Self-Regulatory Organisation
TAI Trustee Association of India
UDIN Unique Document Identification Number
UTR Unique Transaction Reference
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Annex-1
List of circulars superseded by the Master Circular
S. Reference Number of
Date Name of the Circular
No. Circular
1. SEBI/HO/DDHS- May 16, 2024 Master Circular For Debenture
PoD3/P/CIR/2024/46 Trustees
2. SEBI/HO/DDHS/DDHS- January 28, 2025 Format of Due Diligence Certificate to
PoD-3/P/CIR/2025/009 be given by the DTs
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