For existing non-SEBI activities, DTs have six months to disclose the list of such services on their websites. | Photo Credit: Businessline
Under the revised norms, DTs may take up fee-based, non-fund-based financial services not regulated by SEBI, or governed by another financial sector regulator, but only “on an arms-length basis through separate business units.”
Separate business units
The regulator said these Separate Business Units (SBUs) must be ring-fenced from trustee operations through a Chinese Wall, with dedicated staff, independent grievance mechanisms, and separately maintained records. Shared IT and infrastructure are allowed only with procedures approved by the DT’s board.
“The DT shall duly disclose on its website, the list of the activities that are not SEBI regulated, along with a disclosure that none of the SEBI investor protection mechanism will be available for any grievances or disputes arising out of or pertaining to such activities,” SEBI said in a circular on Tuesday.
For existing non-SEBI activities, DTs have six months to disclose the list of such services on their websites, notify all clients that SEBI’s investor-protection mechanism does not apply, obtain written acknowledgements, and file a compliance report with the regulator.
DTs, that are also regulated by the Reserve Bank of India (RBI), must carry out trustee functions exclusively through an SBU, making the segregation mandatory in both directions.
Compliance with the new framework must be confirmed in the half-yearly reports reviewed by their boards.
The proposal to enforce such ring-fencing had earlier been deferred at the board level, as the regulator weighed alternative approaches rather than hiving off activities, as was originally approved. This was with the aim of making regulations easier and facilitating ease of doing business.
Other regulators include RBI, the Insurance Regulatory and Development Authority of India (IRDAI), the Pension Fund Regulatory and Development Authority (PFRDA), the International Financial Services Centres Authority (IFSCA), the Insolvency and Bankruptcy Board of India (IBBI), and the Ministry of Corporate Affairs.
Published on November 25, 2025
