Capital markets regulator Sebi has imposed a fine of Rs 10 lakh on state-run Vijaya Bank for alleged violation of norms related to debenture trustee. Vijaya Bank is registered with Securities and Exchange Board of India (Sebi) as a debenture trustee.
The case pertains to the bank acting as debenture trustee wherein some violations of norms have been found. Sebi conducted an inspection of Vijaya Bank in September 2013, during which a team from the regulator examined records and documents pertaining to various issues handled by the bank from April 2007 to March 2013.
The regulator in its probe found that the bank has violated norms include providing of misleading information with regard to loans granted to issuer firms, non-compliance of creation of debenture redemption reserve by issuer companies in respect of all the issues, among others.
Post Sebi's inspection, the bank is complying with the concerned regulations. Among other violation, the bank did not comply with the listing agreement in respect of Karnataka State Financial Corporation and Canara Bank.
Also, the bank did not maintain the database of issues handled and failed to maintain a proper system to track due dates of interest payment and redemption. Other violations include allotment of debentures to more than 49 persons, non dissemination of information on the website, non-issuance of press release and non-dissemination of the updated events of defaults on DT's (Debenture Trustee) website.
Investor grievances reported by the issuer companies Tata Motors & Tamil Nadu Papers & News papers were also not monitored and no written agreement signed was signed between the bank and Tata Motors which also counted as a violation of debenture trustee regulations.
Accordingly, Sebi has imposed a penalty of Rs 10 lakh on Vijaya Bank.
