SEBI Initiates Comprehensive Review of Debenture Trusteeship Framework; Stakeholder Feedback Invited

The Securities and Exchange Board of India (SEBI) has constituted an Expert Working Group (EWG) to conduct a comprehensive review of the regulatory framework governing debenture trusteeship activities. The initiative aims to modernize the existing regulatory structure in line with the evolving Indian debt market, changing market practices, and the expanding role of debenture trustees in protecting the interests of debenture holders.

According to SEBI, the current regulatory framework under the SEBI (Debenture Trustees) Regulations, 1993 requires a detailed review considering significant developments in the financial sector over the past three decades. The regulator noted that major reforms, including the implementation of the Insolvency and Bankruptcy Code (IBC), 2016 and increased investor participation in the corporate bond market, have transformed the debt ecosystem, necessitating an updated regulatory approach.

The Expert Working Group has been constituted under the chairmanship of Ananta Barua, Former Whole Time Member of SEBI, with Rajnish Kumar, Former Chairman of State Bank of India, serving as Co-Chairperson. The committee also comprises representatives from trustee companies, legal experts, financial institutions, credit rating agencies, industry bodies, and SEBI officials, ensuring broad-based expertise for the review process.

The Group has been entrusted with reviewing the existing provisions of the SEBI (Debenture Trustees) Regulations, 1993, evaluating representations and suggestions received from market participants, recommending measures to strengthen the responsibilities and effectiveness of debenture trustees, examining the existing net-worth requirements applicable to trustees, and identifying other regulatory issues related to debenture trusteeship activities.

As part of the review exercise, SEBI has invited comments and suggestions from the public, regulated entities, market participants, and other stakeholders. The regulator has specifically sought recommendations for simplifying and rationalising the existing framework, eliminating redundant provisions, updating regulations to reflect current market developments, strengthening the role and accountability of debenture trustees, and facilitating ease of compliance while maintaining robust investor protection standards.

The regulatory review is intended to ensure that the debenture trusteeship framework remains aligned with the continued expansion of India's corporate bond market and increasing participation by investors, thereby supporting stronger governance, improved oversight, and enhanced confidence in the debt securities market.