HDFC Bank, 3 others settle case with Sebi; pay Rs 39 lakh towards settlement fee

HDFC Bank, HSBC, Citi Bank, and Deutsche Bank AG have settled, with capital markets regulator Sebi, a case for allegedly not meeting the eligibility criteria prescribed under the Foreign Portfolio Investors (FPI) rules.

These entities have paid a total of Rs 39.36 lakh towards the settlement charges.

Deutsche Bank AG paid Rs 11.05 lakh, Hongkong and Shanghai Banking Corporation Ltd paid Rs 10.87 lakh, HDFC Bank paid Rs 9.18 lakh, and Citi Bank NA paid Rs 8.25 lakh.

The order came after the applicants filed four settlement applications proposing to settle, without 'admitting or denying the findings of fact and conclusions of law' through a settlement order.

"The instant adjudication proceedings initiated against the noticees viz., Deutsche Bank AG, The Hongkong and Shanghai Banking Corporation, HDFC Bank and Citi Bank, vide Show Cause Notice (SCN) dated June 19, 2023, are hereby disposed of Settlement Regulations," said Sebi's Adjudicating Officer Amar Navlani in the order on Thursday.

The order came after Sebi (Securities and Exchange Board of India) observed that as on October 05, 2021, there were certain registered FPIs from the province of Manitoba, who were ineligible for registration /renewal in terms of the FPI norms.

The regulator sought explanation and details from all the designated depository participants (DDPs) regarding the registered FPIs but not meeting the eligibility criteria as per the rules.

Pursuant to the information received from the depository participants as of October 14, 2021, the markets watchdog observed that DDPs such as, Deutsche Bank AG, the Hongkong and Shanghai Banking Corporation and Citi Bank had granted registration /renewal to FPIs, which were ineligible as per the FPI rules.

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Further, HDFC Bank had permitted a FPI to transact in the Indian securities market, despite being ineligible in terms of the Sebi (FPI) regulations, 2019.

In view thereof adjudication proceedings were initiated in respect of the applicants.

Further, a common show cause notice was issued by the regulator on June 19, 2023 to the noticees for the alleged violation of norms, the regulator said.

Subsequent to the issuance of the SCN, the applicants filed settlement applications with Sebi, which recommended to settle the matter on payment of Rs 39.36 lakh.

Consequently, the applicants paid the amount and settled the case.