HDFC entities settle SEBI case with Rs 26 lakh payment
Mumbai, June 18
HDFC Property Fund and HDFC Capital Advisors have settled a case related to the violation of venture fund regulations with the Securities and Exchange Board of India with a payment of Rs 26 lakh.
The case pertains to the alleged delay in completing the process of asset liquidation and distribution of proceeds. The delay in winding up the schemes constitutes a breach of the SEBI's Venture Capital Funds rules.
According to a settlement order issued by the market regulator on Thursday, HDFC Property Fund and HDFC Capital Advisors filed suo motu settlement applications with the regulator proposing to settle by "neither admitting nor denying the findings of facts and conclusions of law".
HDFC Property Fund had launched two schemes -- HDFC India Real Estate Fund (HIREF) and HDFC IT Corridor Fund (HITCF).
Both schemes were constituted for seven years with a provision for extension by two one-year periods. HIREF was constituted on July 18, 2005, while HITCF was launched on July 29, 2005.
In the case of HIREF, the SEBI noted the end date of the extended tenure was June 17, 2014. However, it was noted that the fund completed the process of liquidation of assets and distribution of proceeds on March 31, 2021, which amounts to a delay of around seven years.
Further, the fund had retained Rs 5.33 crore for contingent liabilities, which it distributed to its investors on March 25, 2025.
Similarly, for HITCF, the end date of the extended tenure was June 28, 2014. It was noted that the fund completed the process of liquidation of assets and distribution of proceeds on March 28, 2014.
However, the fund retained a residual amount of Rs 0.89 crore for contingent liabilities, which it distributed to investors on March 25, 2025.
Following discussions with the regulator's committees, HDFC Property Fund and HDFC Capital Advisors agreed to pay Rs 26 lakh as the settlement amount.
"It is hereby ordered that any proceedings that may be initiated for the violations... are settled in respect of the applicants," the SEBI said.
It noted that HDFC Capital Advisors assumed the role of the investment manager for HDFC Property Fund, effective May 2, 2023, due to internal restructuring within the HDFC group, which was a prerequisite for the merger of the erstwhile HDFC with and into HDFC Bank.
HDFC Capital Advisors distributed the entire retained amounts (which the erstwhile investment manager had retained) to the fund's investors in March 2025 to achieve a 'nil' balance in bank accounts of both schemes.
SEBI also clarified that HDFC Capital Advisors had no role in operations and decision-making regarding schemes for which the present settlement applications were filed.
— IANS
Reader Comments
HDFC is a trusted name, but this delay of 7 years makes you wonder... investors could have used that money elsewhere. The settlement amount is too small for such negligence. Hope investors eventually got their returns with interest.
Interesting how HDFC Capital Advisors took over in 2023 and promptly cleared the retained funds by March 2025. Shows internal restructuring can actually resolve old regulatory issues. SEBI's settlement mechanism seems practical here.
Yaar, it's good SEBI settled this case, but Rs 26 lakh for a Rs 5.33 crore plus Rs 0.89 crore retained amount? That's barely 4% penalty. Why do big corporates always get such light settlements? Janta ko toh pata bhi nahi chalta.
On the positive side, at least HDFC took initiative to file suo motu settlement applications. Shows they are trying to clean up past issues. But 7 years delay for HIREF and 11 years to distribute retained funds? Accountability must start from the top.
Important to note that SEBI's order clarifies HDFC Capital Advisors had no role in the original delay – they just inherited the mess. The merger with HDFC Bank probably forced this cleanup. A lesson for all fund managers: don't keep investor money idle.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.