SEBI Grants Extension for Separation of Non-Regulated Activities by Debenture Trustees

Sebi Extends Deadline for Debenture Trustees to Comply with Regulatory Mandate

The Securities and Exchange Board of India (Sebi) has announced an extension of the deadline for debenture trustees to comply with a regulatory mandate. The new deadline, set at October 27, 2026, is six months longer than the original deadline. This decision was made in response to industry representatives highlighting operational challenges in implementing the necessary systems and processes.

In October 2025, Sebi amended the Debenture Trustee rules, requiring debenture trustees holding a valid certificate of registration to transfer their non-Sebi-regulated activities to a separate business unit within six months. Following this amendment, an operational framework was prescribed, outlining the terms and conditions governing activities undertaken by debenture trustees.

Under the framework, debenture trustees are required to undertake non-Sebi-regulated activities on an arms' length basis through one or more separate business units, which must be segregated by a Chinese Wall and ring-fenced from Sebi-regulated activities. This move aims to ensure that debenture trustees maintain a clear distinction between their regulated and non-regulated activities.

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| Comparison of Original and New Deadline | | --- | --- | | Original Deadline | October 27, 2026 | | New Deadline (Extended by 6 months) | October 27, 2026 |

Note: The new deadline is the same as the original deadline, as the extension only adds 6 months to the original deadline.