**Executive Summary**
This circular, issued by the Securities and Exchange Board of India (SEBI) on November 25, 2025, specifies the terms and conditions for Debenture Trustees (DTs) to carry out activities outside the purview of SEBI, as permitted by the amended SEBI (Debenture Trustees) Regulations, 1993, specifically regulation 9C. The circular is effective immediately and requires DTs to submit a compliance report within six months.
**Key Points / Main Content**
* **Permitted Activities Outside SEBI's Purview:**
* DTs may undertake activities falling under other financial sector regulators' purview, or fee-based, non-fund-based activities pertaining to the financial services sector.
* Such activities must be conducted on an arm's-length basis through Separate Business Units (SBUs).
* DTs regulated by the Reserve Bank of India (RBI) must carry out their debenture trustee activity through separate business units.
* DTs already holding a registration certificate can transfer their activities to separate business units within six months, or an extended period as specified by the Board.
* **Conditions for Undertaking Non-SEBI Regulated Activities:**
* Activities must be undertaken at arm's length through SBUs, segregated by a Chinese Wall.
* Grievance redressal mechanisms for non-SEBI regulated activities must be separate from those for SEBI-regulated activities and part of the SBU.
* Separate records must be maintained in the SBU for non-SEBI regulated activities.
* Staff engaged in non-SEBI regulated activities should be distinct, although staff can cross the Chinese Wall subject to board-approved procedures, except for key managerial personnel.
* Resources, including IT infrastructure, may be shared subject to board-approved procedures.
* **Disclosure and Compliance Requirements:**
* DTs must disclose on their website a list of activities not regulated by SEBI, along with a disclaimer regarding the non-availability of SEBI investor protection mechanisms. (To be done within 30 days)
* For activities regulated by other Financial Sector Regulators (FSRs), the relevant FSR's name should be disclosed, and compliance with the FSR's framework is required.
* Advertising and marketing material for non-SEBI regulated activities must be distinct from SEBI-regulated activities.
* Upfront written disclosure to stakeholders is required before undertaking non-SEBI regulated activities.
* For existing arrangements, DTs must make disclosures, obtain confirmation from stakeholders, and submit a compliance report to the Board within six months.
* DTs undertaking any activity not regulated by SEBI must submit an undertaking confirming compliance with Regulation 9C and the circular's provisions as part of their half-yearly compliance report.
**Impact Analysis**
**Stakeholders: All Registered Debenture Trustees, Recognized Stock Exchanges**
* **Impact:** Must comply with new regulations for activities outside SEBI's purview.
* **Action Required:** Establish separate business units, implement distinct grievance redressal mechanisms, maintain separate records, ensure staff separation (with exceptions), disclose non-SEBI regulated activities on website, obtain stakeholder confirmations, and submit compliance reports within the specified timelines.
**Stakeholders: Clients, Beneficiaries and Counterparties of DTs**
* **Impact:** Need to be informed about the nature of activities DTs undertake that fall outside SEBI's regulatory purview and the corresponding lack of SEBI investor protection.
* **Action Required:** Acknowledge and confirm understanding of the nature of the activity, risks involved, and the non-availability of any SEBI investor protection mechanism.
Key Entities Referenced
Securities and Exchange Board of India (SEBI): The primary regulator whose directives are being clarified and whose purview is being defined.
SEBI (Debenture Trustees) Regulations, 1993: The existing regulations that are being amended and clarified by this circular.
Debenture Trustees: The entities to which the circular applies and whose activities are being regulated.
Reserve Bank of India: A financial sector regulator whose regulated Debenture Trustees are subject to specific provisions.
CIRCULAR
HO/17/11/12(3)2025-DDHS-POD1/ I/146/2025 November 25, 2025
To,
All Registered Debenture Trustees,
Recognized Stock Exchanges
Dear Sir/ Madam,
Sub: Specification of the terms and conditions for Debenture Trustees for carrying out
activities outside the purview of SEBI
1. On October 27, 2025, amendments to the SEBI (Debenture Trustees) Regulations, 1993
(‘DT Regulations’) were notified, whereby regulation 9C was incorporated, to bring clarity
on the permitted activities for a DT. The sub-regulation 1 of the said regulation 9C,
provides as follows:
“Permitted Activities.
9C. (1) A debenture trustee may also undertake:
(a) activities which fall under the purview of any other financial sector regulator
specified by the Board, in accordance with the regulations or guidelines issued by
such financial sector regulator; and/ or
(b) activities that do not fall under the purview of the Board or any other financial
sector regulator, which shall be fee-based, non-fund based and pertain to the
financial services sector;
on an arms-length basis through separate business units of such debenture trustee,
in such a manner and subject to such other conditions as may be specified by the
Board:
Provided that a debenture trustee which is also regulated by the Reserve Bank of
India, shall carry out the activity of debenture trustee through separate business unit
of such debenture trustee:
Provided further that a debenture trustee that already holds a certificate of registration
under these regulations may transfer its activities, to separate business unit (s), within
a period of six months from the notification of the Securities and Exchange Board of
India (Debenture Trustee) (Amendment) Regulations, 2025 in the Official Gazette, or
such extended period that the Board may specify.
Explanation: — For the purpose of this regulation, the expression “financial sector
regulator” shall mean the Reserve Bank of India, the Insurance Regulatory and
Development Authority of India, the Pension Fund Regulatory and Development
Page 1 of 3Authority, the International Financial Services Centres Authority, the Insolvency and
Bankruptcy Board of India, the Ministry of Corporate Affairs and such other authorities
as may be specified by the Board.”
2. In this regard, the conditions for DTs to undertake activities that are not regulated by SEBI,
are given below:
2.1. The DT shall undertake such activities that are not regulated by SEBI only at arms’
length basis through one or more Separate Business Unit (SBU) of the DT,
segregated by a Chinese Wall and ring-fenced from the SEBI regulated activities.
2.2. The DT shall ensure that the grievance redressal mechanism including escalation
mechanism, if any, with respect to activities not regulated by SEBI, is separate and
distinct from the grievance redressal mechanism provided for activities regulated by
SEBI and is part of the SBU.
2.3. The DT shall prepare and maintain separate records in the SBU, for the non-SEBI
regulated activities.
2.4. The staff of the DT engaged in the non-SEBI regulated activities, should be distinct
from the staff handling activities regulated by SEBI. However, the staff can cross the
Chinese Wall, subject to due procedures approved by the board of directors of the
DT. Such Chinese Wall shall not be applicable for the key managerial personnel.
2.5. The other resources including the information technology infrastructure may be
shared between the activities regulated by the Board and activities that are not
regulated by the Board subject to due procedures approved by the board of directors
of the DT.
2.6. The DT shall duly disclose on its website, the list of the activities that are not SEBI
regulated, 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. A DT undertaking such activities, as on the date of this circular, shall
make the said disclosure on its website, within thirty days from the date of this circular.
2.7. If the DT undertakes activity regulated by other Financial Sector Regulator (FSR), the
name of the relevant FSR should also be specified in disclosures to relevant
stakeholders. Further, the DT shall comply with the regulatory framework, if any, as
may be specified by the respective FSR for the matters relating to policy, eligibility
criteria, risk management, investor grievance or dispute handling mechanism,
inspection, enforcement and claims.
2.8. The DT shall ensure that its advertising or marketing material and its webpage
displaying information pertaining to non-SEBI regulated activities, shall be separate
and distinct from SEBI-regulated activities.
2.9. Before undertaking any activities which are not regulated by SEBI, there shall be an
upfront written disclosure by the DT, as mentioned at paragraph 2.6 and 2.7 above,
Page 2 of 3to the relevant stakeholders including clients, beneficiaries and counterparties. The
said disclosure shall be made, on all engagement letters, contracts, agreements, and
business communication that such activities do not fall within the regulatory purview
of SEBI. In this regard, confirmation shall also be obtained from the stakeholders, at
the time of engagement, that they have understood the nature of the activity, risks
involved and non-availability of any SEBI investor protection mechanism.
2.10. For the existing and ongoing arrangements w.r.t the non-SEBI regulated activities, a
DT shall make disclosures, as mentioned at paragraph 2.6 and 2.7 above, and obtain
confirmation/ acknowledgement from the stakeholders including clients, beneficiaries
and counterparties, and submit a compliance report to the Board, within a period of
six months from the date of this circular.
2.11. The DT undertaking any activity not regulated by SEBI shall ensure that, in respect of
activities not regulated by the Board, it submits an undertaking as part of the half-
yearly compliance report confirming compliance with the requirements of regulation
9C of the DT Regulations and the provisions of this circular, duly reviewed and
approved by its board of directors.
3. Further, as specified in the first proviso to regulation 9C(1) of the DT Regulations, a DT
which is also regulated by the Reserve Bank of India, shall carry out the activity of DT
through SBUs of such DT. Therefore, the terms and conditions specified at paragraph 2
above shall be complied with by such SBU.
4. The circular shall come into force with immediate effect.
5. This circular is issued in exercise of powers conferred under Section 11(1) of Securities
and Exchange Board of India Act, 1992 and Regulation 2A of SEBI (Debenture Trustees)
Regulations, 1993, to protect the interest of investors in securities and to promote the
development of, and to regulate, the securities market.
6. This circular is available on the website of the Securities and Exchange Board of India at
www.sebi.gov.in under the category “Legal” and under the drop down “Circulars”.
7. This circular is issued with the approval of the competent authority.
Yours faithfully,
Divya Hamirbasia
Deputy General Manager
Department of Debt and Hybrid Securities
Tel No. - 022-2644-9293
Email ID - divyah@sebi.gov.in
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