New SEBI Guidelines for DTs on Non-Regulated Activities
The Securities and Exchange Board of India (SEBI) has issued new circular clarifying the terms and conditions under which debenture trustees may undertake their activities outside the SEBI’s regulatory ambit. The circular is issued in furtherance to the amendments to SEBI (Debenture Trustees) Regulations 1993 dated 27.10.2025 introducing Regulation 9C clarifying the scope of permitted activities for DTs beyond their core SEBI regulated functions.
Regulation 9C of DT Regulation was incorporated to permit DTs to engage in the following activities over and above those regulated by SEBI such as the following:
- Those regulated by other financial sector regulator such as RBI, IRDAI, PFRDA, IFSCA, IBBI and MCA;
- Those not regulated by SEBI or other financial sector authorities provided that they are fee based, non-fund based and fall broadly within the financial services sector.
The circular operationalises the said amendment by laying out the procedural and compliance requirements that DTs must follow while performing the such activities.
It is clarified that all non-SEBI-regulated activities permitted under Regulation 9C must be conducted on an arm’s-length basis and ring-fenced from SEBI-regulated functions by operating through separate business units (SBU), segregated by a Chinese Wall. Such SBUs shall have a distinct grievance redressal mechanism including escalation mechanism, records, staff, webpage, marketing and advertisement. Exclusion is given to human and infrastructure resources to break the Chinese Wall between the SEBI regulated and unregulated activities, subject to due procedures approved by the board of DT.
Disclosures
DTs are required to disclose on their website the list of activities performed by it that are not regulated by SEBI along with a disclosure that none of the SEBI investor protection mechanism will be available for any grievances or disputes arising out of or pertaining to such activities. If the DT undertakes activity regulated by other Financial Sector Regulator, the name of the relevant FSR should also be specified in disclosures to relevant stakeholders.
Further, prior to undertaking any activities which are no regulated by SEBI, there shall be upfront written disclosure to the stakeholders and the same shall be confirmed by such stakeholders.
The circular comes into effect on immediate effect.
Visit SEBI Website for more information.
