An anti-trust organization in India is investigating the trustees of State Bank of India, Axis Bank and IDBI Bank over alleged money laundering activities, which has sparked a lawsuit against a representative group, Reuters sources said.
Indian law requires credit card companies to appoint a so-called “debenture trustee” to protect the interests of investors. Trustees charge financing companies and make independent checks for their due diligence.
The three interviewees – SBICAP Trustee Company, Axis Trustee and IDBI Trusteeship – are among India’s top business leaders who have raised hundreds of billions of dollars by providing trustee services not only with mortgages, but also with real estate and other investment funds.
The Competition Commission of India (CCI) in a December secret statement said the Trustees Association of India – the organization in which the three members formed members – last year “significantly increased” funding to help credit-card companies and prevent members from going bankrupt. price, thus hurting competition.
The organization has filed a lawsuit in Mumbai seeking to rescind an investigation order calling it “illegal” and “unreasonable”, according to court applications. The trial is set to begin on Thursday.
Pending anti-trust inquiries and pending court cases, whose details have not been previously reported, could affect India’s nearly 500 billion indebted market by changing costs and affecting the way trustees operate.
Cartelisation acquisition can result in a fine of up to three times the profit each year on the trust paid by trustees, or 10% of the annual revenue at the time of the breach, depending on the excess.
The SBICAP Trustee and the IDBI Trusteeship did not respond to requests for comment. The Axis Trustee, which is on the list of Presidential Trustees in the documents, also did not respond.
CCI, which did not disclose its ongoing cartel investigation, did not respond to an email seeking comment.
COMPLAINT by BORROWERS
The case of dishonesty was sparked by a complaint by Indian gold-based company Mwothoot Finance. When it sought to increase debt in August last year, Muthoot received a 300% higher cost proposal than before.
The documents show that during Mwothoot’s protest, the IDBI said in an August email “the new pricing structure is determined by the Trustee Association”, adding that “any deviation from the price quote will lead to negative consequences for us”.
The CCI, while directing its investigation, noted: “Such corporate decision-making … affects market competition.”
In February it asked a board of trustees to submit records of their meetings and explain its role in adjusting the amount of fees, a single volume was shown.
The trustee has responded to court claims that higher fees were justified as their cost burden increased over the years due to improvements in compliance requirements.
It said it informed the market regulator SEBI last year that pricing would be determined by the trustees, but “would not be below the level of consideration”.
The group said the matter, legally, could only be investigated by a “special sector director”, in the SEBI case.
SEBI, which already “provides enough checks and balance to deal with any price fraud (cartelisation),” argues.
Before addressing the anti-trust movement, Muthoot once again lodged a complaint against trustees in SEBI, which is still under review, sources said.
SEBI and Muthoot did not respond to Reuters questions.