SEBI Issues Final Order Cancelling Registration of Basan Financial Services Limited
The Securities and Exchange Board of India (SEBI) released a Final Order on April 07, 2026, concerning Basan Financial Services Limited, resulting in the cancellation of its certificate of registration. The action was taken under Section 12(3) of the Securities and Exchange Board of India Act, 1992, read with Regulation 27 of the Securities and Exchange Board of India (Intermediaries) Regulations, 2008.Basan Financial Services Limited was registered with SEBI as a Merchant Banker (MB) under registration number INM000011989.
Background and Findings
SEBI conducted an inspection of the company at its Hyderabad registered office on September 08, 2023. This inspection covered compliance requirements pertaining to the SEBI (Merchant Bankers) Regulations, 1992, and the SEBI (Prohibition of Insider Trading) Regulations, 2015, for the period from April 01, 2022, to June 30, 2023.The inspection identified several compliance lapses, which were communicated to the company. Following subsequent proceedings, a Designated Authority (DA) submitted an Enquiry Report dated May 17, 2024, detailing ten violations.
The key violations observed during the inspection period included:
- Failure to have a dedicated email-ID for complaint redressal.
- Failure to submit any Half Yearly Report during the inspection period.
- Failure to ensure that Key Managerial Personnel and Compliance Officer possessed necessary NISM Certifications.
- Failure to display necessary information at the office premises.
- Failure to formulate an Internal Code of Conduct.
- Failure to maintain the structured digital database as mandated under PIT Regulations.
- Failure to publish the requisite Investor Charter on its website.
- Failure to maintain the requisite minimum net worth.
- Making delayed fee payment for the block 2017-2020 and ceasing fee payments since July, 2020.
- Failure to intimate requisite changes in address through the SI portal.
Basis for Cancellation
Based on these findings, the DA recommended the cancellation of the registration certificate for SEBI Registration No. INM000011989.During subsequent hearings, the Noticee acknowledged the allegations concerning the non-compliance. The Noticee submitted that it had not conducted any merchant banking activity since 2014 and repeatedly sought to voluntarily surrender its Merchant Banker registration, stating that the ongoing compliance requirements were difficult to enforce on a non-operational entity.
However, the final order concluded that the Noticee could not claim immunity from regulatory provisions since its surrender applications had previously been rejected by SEBI, and it remained a registered Merchant Banker until official cancellation.
The formal agreement on the established violations was summarized as follows:
| Violation Category | Regulatory Provision Violated |
|---|---|
| Dedicated Grievance Email | SEBI Circular dated January 22, 2007 |
| Half Yearly Reporting | SEBI Circulars dated May 06, 2008, and May 14, 2012 read with Regulation 28(2) of MB Regulations |
| KMP/Compliance Certifications | SEBI Notifications dated August 02, 2013 and March 11, 2013 read with Regulation 3 of the SEBI (Certification of Associated Persons in the Securities Markets) Regulations, 2007 |
| Office Display Information | SEBI Circular dated August 28, 2014 |
| Internal Code of Conduct | Clause 26 of Schedule III read with Regulation 13 of the MB Regulations |
| Structured Digital Database | Regulations 3(5) and 3(6) and Schedule C of the PIT Regulations |
| Investor Charter Publication | SEBI Circular dated November 23, 2021 |
| Minimum Net Worth | Regulation 7 of the MB Regulations |
| Fee Payment | Regulation 12 read with Schedule II of the MB Regulations |
| Address Change Intimation | Regulation 9A(1)(f) of the MB Regulations and SEBI Circular dated May 02, 2017 |
Final Order
The Quasi Judicial Authority exercised powers under the SEBI Act, 1992, and the Intermediaries Regulations, resulting in the cancellation of the certificate of registration granted to Basan Financial Services Limited (SEBI Registration No: INM000011989). The order came into force with immediate effect.Source:
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