The Securities and Exchange Board of India granted an additional six months for debenture trustees to comply with separate business unit norms. Under the updated regulatory schedule, debenture trustees have until April 27, 2027, to house activities outside the regulator's purview in separate divisions. The compliance mandate stems from Regulation 9C of the Sebi (Debenture Trustees) Regulations, 1993, governing registered trustees. The statutory provisions require registered trustees holding a valid certificate of registration to segregate non-regulated business operations into separate business units. Capital market authorities introduced the provision through formal regulatory amendments notified on October 27, 2025. The policy was established to provide clear structural boundaries regarding activities permitted for registered debenture trustees. Debenture trustees serve as designated intermediaries connecting corporate debt issuers with institutional and retail debt investors. These entities monitor whether borrowing corporations meet financial obligations while protecting the statutory interests of debt security holders.
Debenture trustees oversee compliance with the formal terms of debt issues and initiate legal remedies when corporate issuers default. Sebi initially allotted a six-month transitional window for registered trustees to fulfill the organizational separation mandate. The market regulator subsequently granted an initial six-month extension in April 2026 following representations regarding operational hurdles. That previous extension moved the formal compliance deadline to October 27, 2026, to allow firms to set up internal processing systems. A circular issued on Tuesday established that entities required additional operational time to establish necessary systems and business workflows. The regulatory communication explicitly noted that the previous compliance milestone was set to conclude on October 27, 2026. Industry bodies representing debenture trustees submitted formal representations detailing implementation obstacles associated with the structural framework. Market participants highlighted technical and organizational hurdles involved in segregating non-regulated operations into separate corporate units.
The extended compliance window accounts for an ongoing comprehensive review conducted by an Expert Working Group. Sebi constituted the Expert Working Group in June 2026 to evaluate the regulatory architecture governing debenture trusteeship activities. The appointed working group is reviewing existing rules applicable to trusteeship operations along with the separate business unit framework. The regulatory panel is examining both core trusteeship guidelines and related incidental administrative requirements. In its official circular, Sebi stated that the extension directly reflects the review being executed by the expert committee. The circular noted that representations from trustee associations regarding practical challenges informed the transitional relief decision. The market authority affirmed that registered debenture trustees may maintain existing business arrangements during the extended review period. Trustees must complete the segregation of non-regulated activities into dedicated business entities before the April 2027 deadline expires.
Under paragraph 8.2, debenture trustees' separate business units must be segregated by a Chinese Wall.
The market regulator released an updated master framework on September 28, 2026, replacing the previous guidance from August 13, 2025, according to King Stubb & Kasiva.
