Skip to main content

Sebi widens default disclosure rule

Sebi widens default disclosure rule
Bank loans worth at least Rs 12 lakh crore have at present been classified as NPAs
The Securities and Exchange Board of India (Sebi) has made it compulsory for listed companies to make a disclosure to the stock exchanges if they default on any interest or principal payment obligation to banks.
At present, under Sebi’s Listing Obligations and Disclosure Requirements, companies have to make specific disclosures if there is a delay or default in payment of interest or principal on only debt securities such as non-convertible debentures, listed non-convertible redeemable preference shares or foreign currency convertible bonds.
There was no stipulation on companies to make disclosures with regard to loans taken from banks and financial institutions. That changes with the Friday announcement. 
Sebi has said companies will now have to make disclosures for any default on debt securities such as commercial paper or medium-term notes, on bank loans and on external commercial borrowing.
The disclosures will be have to be made within one working day from the date of the first default. Sebi has also asked listed entities to separately provide information to credit rating agencies on default, in a timely manner.
Bank loans worth at least Rs 12 lakh crore have at present been classified as non-performing assets (NPAs) or loans gone bad.
The Sebi note adds: “Corporates in India are even today primarily reliant on loans from the banking sector. Many banks are presently under considerable stress on account of large loans to the corporate sector turning into stressed assets or NPAs. Some companies have also been taken up for initiation of insolvency and bankruptcy proceedings.”
Experts welcomed Sebi’s move, saying this would help investors to better understand a company’s financial health.
Business Standard, New Delhi, 05 August 2017

Comments

Popular posts from this blog

RBI minutes show MPC members flagged upside risks to inflation

RBI minutes show MPC members flagged upside risks to inflation Concerns about economic growth and easing inflation prompted five of the six monetary policy committee (MPC) members to call for a cut in the repo rate, but most warned that prices could start accelerating, show the minutes of the panel’s last meeting, released on Wednesday. The comments reflected a tone of caution and flagged upside risks to inflation from farm loan waivers, rise in food prices, especially vegetables, price revisions withheld ahead of the goods and services tax, implementation of house rent allowance under the 7th pay commission and fading of favourable base effect, among others. On 2 August, the panel chose to cut the repurchase rate—the rate at which the central bank infuses liquidity in the banking system—by 25 basis points to 6%. One basis point is one-hundredth of a percentage point. Pami Dua, professor at the Delhi School of Economics, wrote that her analysis showed “a fading economic growth outlook, as …

Shrinking footprints of foreign banks in India

Shrinking footprints of foreign banks in India Foreign banks are increasingly shrinking their presence in India and are also becoming more conservative than private and public sector counterparts. While many of them have sold some of their businesses in India as part of their global strategy, some are trying to keep their core expertise intact. Others are branching out to newer areas to continue business momentum.For example, HSBC and Barclays Bank in India have got out of the retail business, whereas corporate-focused Standard Chartered Bank is now trying to increase its focus on retail “Building a retail franchise is a huge exercise and takes a long time. You cannot afford to lose it,” said Shashank Joshi, Bank of Tokyo-Mitsubishi UFJ’s India head.According to the Reserve Bank of India (RBI) data, foreign banks’ combined loan book shrunk nearly 10 per cent from Rs 3.78 trillion in fiscal 2015-16 to Rs 3.42 trillion last financial year. The banking industry, which includes foreign banks…

Differential Tax Levy under GST: Food Firms May De-Register Trademarks

Differential Tax Levy under GST:Food Firms May De-Register Trademarks The government’s decision to charge an enhanced tax rate on trademark food brands is leading several rice, wheat and cereal manufacturers to consider de-registering their product trademarks. Irked by the June 28 central government notification fixing a 5 per cent goods and services tax (GST) rate on food items packaged in unit containers and bearing registered brand names, the industry has made several representations to the government to reconsider the differential tax levy, which these players say is creating an unlevel playing field within these highly-competitive and low-margin industries. Sources say that the move has affected the packaged rice industry the hardest and allowed the un-registered market leaders, India Gate and Daawat, to gain advantage as compared to other registered brands such as Kohinoor and Lal Qilla. Smaller players are even more worried with this enhanced rate of tax (against the otherwise …