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HDFC Property Fund and HDFC Capital Advisors have settled proceedings initiated by the Securities and Exchange Board of India (Sebi) over delays in winding up two real estate-focused venture capital fund schemes by jointly paying INR 26 lakh. The case relates to alleged non-compliance with Sebi's Venture Capital Funds Regulations concerning the liquidation of assets and distribution of proceeds under the HDFC India Real Estate Fund (HIREF) and HDFC IT Corridor Fund (HITCF). Sebi noted that both schemes exceeded prescribed timelines for winding up, with HIREF taking nearly seven years beyond its extended tenure to complete liquidation. The settlement, reached without admission or denial of findings, closes potential enforcement proceedings against the entities while highlighting regulatory expectations around timely closure of investment vehicles and distribution of investor funds.
HDFC Property Fund and HDFC Capital Advisors have settled a regulatory matter with the Securities and Exchange Board of India (Sebi) after paying INR 26 lakh in connection with delays in winding up two venture capital fund schemes focused on real estate investments. The settlement order was issued in the past week, bringing to a close proceedings relating to alleged violations of Sebi's Venture Capital Funds Regulations.
The matter arose from Sebi's examination of the winding-up process of two schemes launched by HDFC Property Fund — HDFC India Real Estate Fund (HIREF) and HDFC IT Corridor Fund (HITCF). Both schemes were established in July 2005 with an initial tenure of seven years and provisions allowing extensions of up to two additional one-year periods.
According to Sebi, the extended tenure of HIREF ended on June 17, 2014. However, the fund completed the liquidation of assets and distribution of proceeds only on March 31, 2021, resulting in a delay of approximately seven years beyond the permissible period. In addition, the scheme retained INR 5.33 crore towards contingent liabilities, which was subsequently distributed to investors in March 2025.
In the case of HITCF, the extended tenure expired on June 28, 2014. While the scheme completed the liquidation process, it retained INR 0.89 crore for contingent liabilities. Sebi noted that the retained amount was distributed to investors only in March 2025, well after the expiry of the scheme's tenure. The regulator considered these delays as instances of non-compliance with rules governing the timely winding up of venture capital fund schemes and distribution of proceeds to investors.
Sebi's settlement order stated that HDFC Property Fund and HDFC Capital Advisors submitted suo motu settlement applications under the Sebi (Settlement Proceedings) Regulations, 2018. The applicants proposed resolving the matter without admitting or denying the regulator's findings of fact or conclusions of law. Following discussions with Sebi's Internal Committee and the High Powered Advisory Committee, the entities agreed to a settlement amount of approximately INR 26 lakh.
The regulator also recorded that HDFC Capital Advisors became the investment manager of HDFC Property Fund on May 2, 2023, as part of the internal restructuring undertaken ahead of the merger of erstwhile HDFC Ltd with HDFC Bank. The company informed Sebi that it had no role in the operation or decision-making of the schemes during the period when the delays occurred. It further ensured that the entire retained amounts were distributed to investors in March 2025, resulting in nil balances in the bank accounts of both schemes.
With the settlement amount paid, Sebi has ordered that any proceedings arising from the alleged violations stand settled in respect of the applicants, subject to the conditions specified in the settlement order.
Source - PTI
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