Groww AMC Settles SEBI Case By Paying INR 9 Lakh

Fintech major Groww’s asset management arm has paid INR 9 Lakh to the Securities and Exchange Board of India (SEBI) to settle a case related to alleged violation of norms. 

Groww Asset Management Company Ltd (formerly known as Indiabulls Asset Management Company Ltd) and Groww Trustee Ltd (formerly known as Indiabulls Trustee Company Ltd) filed a suo motu settlement application with SEBI to settle, by neither admitting nor denying the findings of fact and conclusions of law, the enforcement proceedings that may be initiated against them for the violation of a SEBI circular.

In the settlement application, Groww AMC and Groww Trustee said during April 1, 2020 to March 31, 2022, certain scheme related expenses were being paid by the AMC and were not paid from the schemes. 

This was in violation of SEBI norms, which say that all scheme related expenses, including commission paid to distributors, has to be paid from the scheme, and not from the books of the AMC, its associate, sponsor, trustee or any other entity through any route.

It is pertinent to note that Groww completed the acquisition of Indiabulls Asset Management for a consideration of INR 175.6 Cr in May 2023.

After the filing of the application, the authorised representatives of Groww AMC and Groww Trustee held a meeting with the internal committee of SEBI to discuss the aforementioned issues and the terms of the settlement.

Following this, the applicants proposed revised settlement terms to settle any enforcement proceedings that may be initiated against them for the violations.

“The High Powered Advisory Committee (HPAC) in its meeting held on December 21, 2023 and March 04, 2024, considered the revised settlement  terms proposed  by  the applicants and recommended the case for settlement upon payment of INR 9 Lakhs,” said SEBI in its order dated June 28. 

Following this, the applicants made the payment and the same was confirmed by SEBI.

The settlement will offer the company protection from any future “enforcement action” from SEBI in connection with the said violations. 

The acquisition of Indiabulls Asset Management paved the way for Groww’s entry into the mutual fund space. Groww AMC received SEBI’s nod to launch its first mutual fund in September last year. Earlier this year, it also got the regulator’s nod to launch India’s first Nifty non-cyclical consumer index fund.

Zerodha, Groww’s rival in the discount broking space, also received SEBI’s greenlight to launch an asset management company last year. Following this, Zerodha Fund House launched its maiden mutual funds in October last year.