SEBI Cancels Basan Financial Services' Merchant Banker Registration For Multiple Regulatory Violations

The Securities and Exchange Board of India (SEBI) on 7 April 2026 cancelled the certificate of registration of Basan Financial Services Limited, a registered Merchant Banker, for multiple violations of regulatory provisions under the SEBI Act, 1992.

The Quasi-Judicial Authority, Biju S, stated:

“It is pertinent to note that the Noticee being a MB has to ensure compliance with all applicable regulatory provisions. In the present case, the Noticee has failed to adhere to fundamental requirements under the MB Regulations such as maintaining minimum net-worth, payment of fees and obtaining necessary certifications.”

The case arose after SEBI issued a post-enquiry show cause notice under the SEBI (Intermediaries) Regulations, 2008.

SEBI had earlier inspected Basan's registered office in Hyderabad for the period 1 April 2022 to 30 June 2023 to verify compliance with the SEBI (Merchant Bankers) Regulations, 1992, and the SEBI (Prohibition of Insider Trading) Regulations, 2015. The inspection revealed multiple regulatory violations, which SEBI communicated to Basan, and Basan submitted its replies.

After the inspection, SEBI started enquiry proceedings and issued a pre-enquiry show cause notice. The designated authority reviewed Basan's submissions and found multiple violations. These included failure to maintain grievance redressal mechanisms, not submitting periodic reports, lacking required certifications, not maintaining records and databases, failing to comply with disclosure and net worth requirements, and not paying required fees. The authority recommended cancelling Basan's registration. SEBI then issued the show cause notice.

Basan argued that it had not undertaken any merchant banking activity since 2014 and claimed that SEBI's delays in processing its surrender applications resulted in the company being treated as a continuing intermediary and subjected to ongoing compliance obligations.

SEBI, however, observed that Basan had not disputed the allegations in the show cause notice. It noted that SEBI had rejected and communicated Basan's surrender applications and that SEBI had previously suspended its licence for six months for violations of the Merchant Bankers Regulations. SEBI emphasised:

“Therefore, the Noticee was cognizant of the fact that regulatory provisions are fully applicable to it till the time it continues to be a registered MB. Since the surrender of its certificate of registration was not accepted by SEBI, at this stage the Noticee cannot claim immunity from the regulatory provisions applicable to it.”

Considering the nature and extent of violations, SEBI accepted the recommendation of the designated authority.

Accordingly, SEBI cancelled Basan's certificate of registration.