From 27 October 2026, a registered debenture trustee in India must carry on its activities that SEBI does not regulate, such as acting as escrow agent, facility agent or security trustee, through separate business units. The requirement comes from Regulation 9C of the SEBI (Debenture Trustees) Regulations, notified on 27 October 2025, read with the SEBI circular of 25 November 2025 that sets the conditions and the SEBI circular of 28 April 2026 that fixed the implementation date. For issuers, borrowers and lenders, the practical effect is clearer labelling. These mandates are commercial contracts, and SEBI's investor-protection framework for debenture holders does not extend to them.
Why SEBI made the change
A debenture trustee has a defined regulatory job. It acts for the holders of debt securities under SEBI's framework. Over time, many trustees also took on related work that SEBI does not regulate: administering escrow accounts, acting as agent for lenders under loan agreements, holding security for a group of lenders. A client dealing with one firm for all of this could reasonably assume that the same regulatory protections applied throughout.
Regulation 9C draws a line between the two. Regulated debenture-trustee activity stays where it is. Everything else moves into one or more separate business units, run and presented separately, so that a client can see which protections apply to which mandate.
What changes on 27 October 2026
The 25 November 2025 circular sets out the conditions on which a debenture trustee may continue its non-SEBI activities. In broad terms they deal with separation, disclosure, and grievances and records.
On separation, the activities are carried on through separate business unit(s), at arm's length from the regulated business. On disclosure, clients are told clearly that these activities are not regulated by SEBI and that SEBI's investor-protection mechanisms do not apply to them. Complaints about non-SEBI activities go through separate arrangements, and the records are kept separately too.
The April 2026 circular extended the deadline, so the amendment and the circular must now be implemented by 27 October 2026. The summary above is high level. For the full conditions, read the circulars themselves: the 25 November 2025 circular and the 28 April 2026 extension are both on SEBI's website.
Which roles are affected
These are the roles that come up most often in this context:
| Role | What it involves | Regulated by SEBI? |
|---|---|---|
| Debenture trustee | Acts for holders of debentures under SEBI's framework | Yes |
| Escrow agent | Holds and releases funds, securities or documents against agreed conditions | No; contractual |
| Facility agent | Administers a loan facility for lenders: notices, payments, information flow | No; contractual |
| Security trustee | Holds security on behalf of a group of lenders | No; contractual |
| Monitoring agent | Tracks covenants, payments, end-use and conditions for lenders | No; contractual |
In the contractual roles, the agent's duties come from the agreement that appoints it. That was always the position. Regulation 9C simply makes it visible.
What issuers and lenders should check
The questions are the same whether the existing provider is a debenture trustee or an independent firm.
- Who exactly is appointed? Confirm the legal entity and, where relevant, the business unit named in the agreement. If the provider is reorganising, this is the first thing to look at.
- What do the documents say the agent must do? Release conditions, timelines, reporting and escalation should be written as obligations that can be tested. A release "on satisfactory completion" invites the question: satisfactory to whom?
- What protections apply? A contractual mandate rests on the agreement, the agent's processes and its liability terms. SEBI's debenture-holder protections do not come into it.
- How are grievances handled? Know whom to contact and how disputes are resolved.
- Is any document change needed? Where a provider is reorganising, check whether notices, consents or amended agreements are required, and who bears the cost.
- Is the process controlled? Maker-checker approvals, reconciliation and a complete audit trail matter more than the label on the provider.
Risks and dependencies
Three points deserve attention.
The first is document drift. Agreements signed before the change may name an entity or unit that is now being reorganised. Check them; do not assume.
The second is assumed protection. If the parties treat a contractual escrow or agency mandate as though it carried regulatory protection, the gaps end up in the agreement itself, where nobody was looking for them.
The third is operational continuity. Any reorganisation is a moment when contacts, mandates and bank instructions change. Get them confirmed in writing.
Frequently asked questions
What is Regulation 9C of the SEBI (Debenture Trustees) Regulations? A provision notified on 27 October 2025. Under it, a debenture trustee carries on activities not regulated by SEBI through separate business unit(s), subject to the conditions SEBI specified in its circular of 25 November 2025.
What is the deadline for implementation? 27 October 2026. SEBI's circular of 28 April 2026 requires debenture trustees to implement the amendment and the circular by that date.
Is an escrow agent regulated by SEBI? Not in that capacity. Acting as escrow agent on a commercial transaction is a contractual role, governed by the escrow agreement. It is not a SEBI-regulated debenture-trustee activity, which is exactly why it is one of the activities Regulation 9C separates.
Does a company have to use a debenture trustee as escrow agent? Not generally. The parties to the transaction choose the escrow agent, subject to the transaction documents and to any specific legal requirement that applies to that transaction.
Do existing escrow or agency mandates stop on 27 October 2026? Regulation 9C deals with how debenture trustees organise and present these activities. It does not bring them to an end. Parties should still read their agreements for any notices or amendments a reorganisation may need.
How Gradivus can help
Gradivus is an independent capital markets services firm, not a debenture trustee. Where appointed, we structure and administer escrow mechanisms and act as monitoring agent under the agreed transaction documents. That means condition-based releases, defined waterfalls, structured reporting and a complete audit trail. See our Escrow Services and Debt Monitoring & Compliance pages, or contact us for a consultation. Agency roles apply only where Gradivus is specifically appointed.
This article is general information, not legal, tax or investment advice.
Sources
- SEBI circular on terms and conditions for debenture trustees carrying out activities outside the purview of SEBI (25 Nov 2025): https://www.sebi.gov.in/legal/circulars/nov-2025/specification-of-the-terms-and-conditions-for-debenture-trustees-for-carrying-out-activities-outside-the-purview-of-sebi_97944.html
- SEBI circular extending the implementation timeline to 27 Oct 2026 (28 Apr 2026): https://www.sebi.gov.in/sebi_data/attachdocs/apr-2026/1777434657240.pdf
- SEBI Master Circular for Debenture Trustees (28 Sep 2026): https://www.sebi.gov.in/legal/master-circulars/sep-2026/master-circular-for-debenture-trustees_104743.html