The Securities Appellate Tribunal (SAT) on Monday upheld a Sebi order imposing a Rs 2-lakh fine on private lender Axis Bank, saying the same individual cannot be on the board of both the debenture trustee and the issuer.

In 2009, the market regulator had found certain deficiencies in Axis Bank's books and passed an order imposing a fine of Rs 2 lakh on the lender.

The case relates to two separate debenture issues from Mahindra & Mahindra Financial Services and Noida Toll Bridge in early 2009, in which Axis Bank acted as a debenture trustee. According to Sebi rules, the same individual cannot be on the board of both the debenture trustee and the issuer.

The case came up for hearing before SAT after Axis Bank appealed against the Sebi order. The watchdog had inspected the bank's books and accounts to verify whether it was in compliance with the bench of trustee norms, and also to look into its conduct as a debenture trustee.

SAT upheld Sebi's contention. "This was the case at Axis Bank where the same individual was on the board in two cases - in Mahindra & Mahindra Financial Services and in Noida Toll Bridge. Therefore, Axis Bank's appeal is thus rejected on these two grounds," SAT Presiding Officer N K Sodhi said.

Also, as per the norms, SAT said Axis Bank, which was the debenture trustee, cannot lend money to issuers of the debentures. It was found that in some cases, money was lent to the issuers at Axis Bank itself.

However, SAT observed there was "no intentional breach of norms" by the bank and therefore the lender would be fined merely Rs 2 lakh. Axis Bank was represented by R S Loona, while the Sebi counsel was Shiraz Rustomjee. (PTI)