Securities Appellate Tribunal upholds SEBI fine on Axis bank for violating norms

MUMBAI The Securities Appellate Tribunal (SAT) upheld the Security and Exchange Board of India ’s (Sebi) Rs 2-lakh penalty on Axis Bank for violation of debenture trustee’s norms. Dismissing the country’s third largest private sector bank’s appeal, the tribunal observed that the debenture trustee cannot lend money to an issuer company and also can have same individuals acting as a director on the board of both the parties.Market regulator Sebi had fined the bank in March 2011 after its investigation. Axis Bank, which had lent funds to Hindustan Construction Company (HCC), also acted as a trustee when the company came out with an issue of Rs 1000000000 of secured redeemable non-convertible debentures in 2006.“These were not in compliance with the regulations, since the noticee can’t act as a trustee to the same company it has lent,” it said. The capital market regulator has also observed that there was a common director on the board of Axis Bank and Noida Toll Bridge (NTBCL) at the time of acceptance of offer by the bank as a debenture trustee.While in other such event, one of the Axis Bank director on board, was also a director on the board of Mahindra and Mahindra Financial Services (MMFS) at the time of acceptance of offer as trustee.