Sebi mulls larger role for debenture trustees, proposes new norms

Market regulator points out challenges in case of defaulting NBFCs

The Securities and Exchange Board of India (Sebi) on Tuesday proposed new norms for debenture trustees (DTs), to give the latter a larger role in protecting interests of debenture holders in case of defaults from the bond-issuing company.  

The market regulator pointed out that only in ten per cent of defaulting secured issues, DTs were able to successfully enforce the security.

Further, the regulator pointed out DTs found it easier to enforce securities in the case of manufacturing companies as there was a fixed charge, but "the same is not true in the case of NBFCs due to floating charge