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3 min read | Updated on January 10, 2025, 19:06 IST
SUMMARY
SEBI has issued new guidelines delegating the decision-making authority for interest waiver or reduction requests during recovery proceedings to panels comprising Executive Directors and Whole-Time Members, depending on the amount involved.
New SEBI rules: Executive directors, whole-time members to decide on interest waiver requests.
Markets regulator SEBI on Friday issued a circular outlining a procedure for seeking a waiver or reduction of interest levied on unpaid penalties during recovery proceedings. The authority to decide on such matters has been delegated to panels comprising SEBI’s Executive Directors and Whole-Time Members, depending on the quantum of interest involved.
The Securities and Exchange Board of India (SEBI) said that the panel of Executive Directors will decide on the waiver or reduction when the interest due is less than ₹2 crore, and the panel of Whole-Time Members in other cases.
The regulator clarified that the waiver or reduction of interest will not apply in cases where interest is for failure to pay SEBI's fees by intermediaries and interest is related to amounts ordered for disgorgement or refund under SEBI Act provisions.
The circular also specified a detailed procedure for filing applications.
Applicants seeking waiver or reduction of interest must submit their requests to the Recovery Officer with jurisdiction over the matter, using the prescribed format.
To qualify, they must demonstrate that paying the interest caused or would cause "genuine hardship", that the default occurred due to circumstances beyond their control, and that they cooperated fully in inquiries or recovery proceedings.
Waivers or reductions can only be sought for interest accrued after the notice of demand was served, and only if the principal penalty amount has been fully paid, according to the circular.
SEBI has set a 12-month timeline for processing applications, effective from the end of the month in which the complete application is received.
"The order accepting or rejecting the application, either in full or in part, shall be passed within a period of twelve months from the end of the month in which the application complete in all respects is received," SEBI said.
“However, for applications pending as on the date of issuance of this circular, order accepting or rejecting the application, either in full or in part, shall be passed within a period of twelve months from the end of the month of the issuance of this circular," it added.
Applicants must be given an opportunity to present their case before any rejection, and incomplete applications will be returned to the applicant for rectification.
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