Deustche Bank, HSBC, HDFC Bank, Citi Bank settle with Sebi following allegations of FPI norms violations

A common showcause notice dated June 19, 2023, had been issued to the banks.

Deutsche Bank AG, The Hongkong and Shanghai Banking Corporation Ltd, HDFC Bank and Citi Bank NA have settled with the market regulator, following an examination by the regulator into the banks' alleged violations of Sebi (Foreign Portfolio Investors) Regulations.

The banks were examined in their role as designated depository participants (DDPs). DDPs can issue registration to FPIs and certify them, after doing the due diligence.

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The banks have paid Rs 11.05 lakh, Rs 10.87 lakh, around Rs 9.18 lakh and Rs 8.25 lakh respectively, as settlement amount, without admitting or denying the findings and conclusions. The details were given in a Securities and Exchange Board of India (Sebi) order dated February 29.

A common showcause notice dated June 19, 2023, had been issued to the banks and the notice alleged the following.

One, Deutsche Bank AG had granted registration/renewal to certain FPIs which were ineligible as per the SEBI (FPI) Regulations and has violated provisions of Regulation 4(d) of the SEBI (FPI) Regulations, 2019.

Two, The Hongkong and Shanghai Banking Corporation Limited had granted registration /renewal to certain FPIs which were ineligible as per the SEBI (FPI) Regulations, 2019 and has violated provisions of Regulation 4(d) and 4 (e) of the SEBI (FPI) Regulations.

Three, HDFC Bank Limited had permitted a FPI to transact in Indian securities market, despite being ineligible in terms of the SEBI (FPI) Regulations, 2019 and has violated provisions of Regulation 4(f) of the SEBI (FPI) Regulations.

Four, Citi Bank N.A. has granted registration/renewal to FPIs which are ineligible as per the SEBI (FPI) Regulations, 2019 and have violated provisions of Regulation 4(e) of the SEBI (FPI) Regulations.

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The Sebi settlement order stated that, pending adjudication proceedings that were initiated through the showcause notice dated June 19, 2023, the banks proposed to settle the instant proceedings initiated against them, without admitting or denying the findings of facts and conclusions of law.

Their applications and settlement terms were considered and cleared by internal committee of Sebi and by the High Powered Advisory Committee.