What is a debenture trust deed? SEBI format rules

A debenture trust deed is where a bond's promises actually live. The offer document sells the issue, but the deed is the contract that binds the issuer to the debenture trustee and gives the trustee something to enforce. SEBI changed how much of it an issuer gets to draft in October 2025. This guide covers what a debenture trust deed is, the specified format, how deviations are handled, and which clauses are void regardless of what the parties agreed. It is not investment advice.

What is a debenture trust deed under SEBI rules?

Regulation 18 of the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 is the governing provision. An issuer of debt securities appoints a debenture trustee and executes a debenture trust deed with it. The deed carries the covenants of the issue: title to the security, security cover as per the terms of the issue, restrictions on further borrowing, and the rest of what the issuer has undertaken.

The trustee is not a passive signatory. Its duties come from a different rulebook, the SEBI (Debenture Trustees) Regulations, 1993, whose Regulation 15 requires the trustee to exercise due diligence on the issuer's compliance with the trust deed, to take steps to protect holders as soon as any breach of the deed comes to its notice, to inform SEBI immediately of a breach, and in defined default events to appoint a nominee director on the issuer's board.

So the deed matters twice. It sets the obligations, and it sets the standard the trustee polices.

What changed in October 2025?

Until then, Regulation 18(1) told issuers when to execute the deed but not what it had to look like. SEBI closed that gap.

The amendment, notified in October 2025 by notification no. SEBI/LAD-NRO/GN/2025/268 and in force on the date of its publication in the Official Gazette, made three changes to Regulation 18.

First, it inserted the words "in such format and" into sub-regulation (1), between "execute the trust deed" and "within such timelines". Format joined timing as a mandated element. SEBI separately publishes a format of trust deed executed between a debenture trustee and an issuer, which is what that requirement points to.

Second, it added a proviso creating a controlled exit from the format, described below.

Third, it omitted a sentence from sub-regulation (4). That sentence had required the deed to consist of two parts: Part A containing statutory and standard information pertaining to the debt issue, and Part B containing details specific to the particular debt issue. That two-part architecture is no longer a regulatory requirement.

The two changes fit together. Once a full format is prescribed, a rule splitting the deed into a standard half and a bespoke half becomes redundant, because the standard content is the format itself.

How are deviations from the format handled?

Not by prohibition, and not by SEBI approval. By disclosure to the trustee, with reasons.

The proviso added after Regulation 18(1) reads that in case of any deviation from the format specified for the trust deed, the debenture trustee may accept such deviations if a key summary sheet capturing the deviations along with the rationale for the same is provided by the issuer in the General Information Document, Key Information Document or Shelf Prospectus.

Three features of that design are worth naming. The gatekeeper is the debenture trustee, who may accept deviations rather than must. The justification is a rationale, not merely a list, so an issuer has to say why it departed. And the key summary sheet goes into an offer document, which means the deviations travel to investors rather than staying between the issuer and the trustee.

That last point is what makes the proviso more than an internal formality. An investor reading a General Information Document or Shelf Prospectus can see, in one place, where this deed differs from the standard one and on what reasoning.

Which trust deed clauses do not work at all?

Some, no matter what the parties signed.

Chapter VIII paragraph 1 of SEBI's Master Circular for Debenture Trustees, in force from 13 August 2025, addresses clauses that limit or extinguish the debenture trustee's obligations in relation to any rights or interests of holders of debt securities, or that conflict with the Debenture Trustees Regulations. Such clauses, in an existing or a new debenture trust deed, shall not be applicable and shall stand null and void.

The reach into existing deeds is the notable part. This is not a rule about drafting future documents. A clause of that kind already sitting in a live deed is inoperative.

When is the deed executed and where does it become visible?

The deed is signed around the security creation and listing sequence, and it does not stay private.

Under the debenture trustee framework, the issuer enters the covenants of the issuance into the trustee's system and uploads the debenture trust deed within five working days of signing it. Where terms change later, a supplemental or amended deed is executed and submitted.

The deed also anchors obligations that surface in other filings. Asset cover undertakings are expressed against the security set out in the debenture trust deed. Bank details are provided at the time of executing the deed. And the trustee's monitoring duties run off it: at least seven days before each interest or principal due date the trustee seeks ISIN-wise payment status from the issuer, intimates the credit rating agencies, and reports payment, delay or silence to them within one day after the due date. That flow is one input into the credit rating and into the default history field of the centralised corporate bond database.

For anyone reading a debt issue rather than a single prospectus page, the practical upshot of the 2025 change is that trust deeds are now closer to comparable across issuers, and where they are not, the key summary sheet in the offer document is where the difference is supposed to be declared. That is a better starting point than reading an NCD deed cold. Flock reports public regulatory filings with every claim sourced and dated. What any of it means for your money is your call to make.