On January 10, 2025, SEBI issued a circular outlining the procedure for seeking a waiver or reduction of interest in recovery proceedings initiated for failure to pay penalties. The circular leverages powers granted under relevant securities laws, including the SEBI Act, 1992, and aligns with provisions of the Income-tax Act, 1961, ensuring consistency and fairness in handling interest-related grievances.
Key Provisions
- Authority for Waiver or Reduction:
SEBI has delegated decision-making powers to:- A Panel of Executive Directors for requests involving interest amounts below ₹2 crores.
- A Panel of Whole-Time Members for amounts exceeding ₹2 crores.
- Eligibility:
Applications for interest waivers can only be made if:- The principal penalty amount has been fully paid.
- The waiver is sought for the period after the notice of demand is served.
- Exclusions:
Waivers are not applicable in cases involving:- Interest levied on unpaid fees by intermediaries.
- Interest related to disgorgement or refund orders under Section 11 or 11B of the SEBI Act.
- Application Process:
- Applications must be submitted to the Recovery Officer using the prescribed format (Annexure A), along with supporting documents.
- Applicants must establish genuine hardship, circumstances beyond their control, and full cooperation in SEBI’s inquiries.
- Incomplete applications will be returned, and rejection decisions will include an opportunity for a hearing.
- Timeline:
- Decisions must be issued within 12 months of receiving a complete application.
- Pending applications as of January 10, 2025, will adhere to the same timeline.
Implications
The circular provides a structured process for applicants while ensuring transparency, fairness, and timely resolution of requests. It emphasizes the importance of fulfilling all conditions, including full payment of the principal penalty, and aims to balance regulatory enforcement with genuine financial hardship considerations.
For further details, the circular is available on SEBI’s website under the “Legal” section.
