Sebi Flags IIFL Capital's Merchant Banking Practices

Sebi issued a warning to IIFL Capital Services over due diligence issues in debt management by its merchant banking division. Concerns included disclosure practices and fees payment timelines. The administrative warning follows an inspection covering April 2022 to April 2024. IIFL Capital stated there's no financial impact.

The Securities and Exchange Board of India (Sebi) has issued a warning to IIFL Capital Services for inadequate due diligence in handling debt issues through its merchant banking division.

According to a disclosure by IIFL Capital, the regulator sent an administrative warning letter dated March 7, 2025, addressing several observations made during an inspection. The inspection scrutinized debt issues managed by IIFL's merchant banking division from April 1, 2022, to April 30, 2024.

Sebi flagged concerns about the transparency of issue-related expenses and the timelines for intermediary payment fees in offer documents. The warning was issued after IIFL's response under the ICDR Regulations, 2021. Notably, the company emphasized that Sebi's action would not financially impact them.

(With inputs from agencies.)