Sebi's circular naming defaulters draws flak; companies approach FinMin

Sebi's circular naming defaulters draws flak; companies approach FinMin

The list featured some prominent names like SBI Capital, Axis Capital, GMR Holdings, United Breweries, Alpic Finance, Saradha Realty, United Bank of India &Trident India

Market regulator Securities and Exchange Board of India (Sebi) is once again caught on the wrong foot, and this time for one of its recent circulars that made public names of over 2,000 entities, which have defaulted on its dues

Some of the companies named in the list have raised objections with the finance ministry, stating that the list was erroneous, said sources aware of the development. The regulator had pulled out the circular dated 2 April within hours without any explanation. But, the uncertainty and confusion among market players, triggered by the list, lingered.

The list featured some prominent names like SBI Capital, Axis Capital, GMR Holdings, United Breweries, Alpic Finance (a Cipla group unit), Saradha Realty, United Bank of India and Trident India.“Putting our name on the defaulter list has sent a wrong message to our shareholders.

It has affected the company image,” said the official of a company whose name was on the list. An executive with another firm said, “We were surprised to see the name on the defaulter list and sought clarification from our legal team. During the course of inquiry, we came to know that matter has been settled long ago.” An email sent to the Sebi, seeking clarity on the issue, drew a blank.

Industry players said the list could be a case of system error. “The list was old and system-generated, which was not updated. Some of these cases are pending before adjudicating authority, while some entities have already paid the penalty and settled the issue,” said a person privy to the development.

The list released by Sebi had named 2,183 defaulters, including individuals and companies, against whom the watchdog has passed adjudication orders. Some of the cases dated back to 1998. The amount of penalty imposed varied between Rs 15,000 and Rs 100 million.

They have been slapped with charges such as failing to redress investor grievances, breaching of disclosure and insider trading norms.

In some cases, the regulator has initiated recovery proceedings and has attached assets to recover dues. Non-payment of dues in cases such as Saradha Realty India, Rose Valley Real Estate and Pearl Agrotech Corporation is on account of pending appeals before various courts.

Legal experts are of the opinion that making defaulters' list public is a good move and it will help the market tackle such entities with caution.Last year, Sebi had faced similar criticism for suspending trading in 331 “suspected” shell companies.Some of them were well-known companies with proper operations and complied with disclosure requirements, including filing of quarterly results.

Some of the firms had challenged Sebi’s move before the Securities Appellate Tribunal (SAT) and got a temporary relief. SAT also asked the regulator to conduct fresh inquiry into the matter.

On another occasion, the regulator invited criticism for the last-minute withdrawal of circular mandating listed companies to disclose any kind of loan default within 24 hours.

Of late, Sebi has become more proactive with dealing with the cases of non-payment of dues and other disclosure lapses. Sources say the regulator has directed the stock exchange to red flag cases where such defaults are consistent and the company is not complying with certain securities norms.

The Business Standard, New Delhi, 24th April 2018

RBI deputy governor cautions fintech platform lenders on privacy concerns during loan recovery

India's digital lending infrastructure has made the loan sanctioning system online. Yet, loan recovery still needs a “feet on the street” approach, Swaminathan J, deputy governor of the Reserve Bank of India, said at a media event on Tuesday, September 2, according to news agency ANI.According to the ANI report, the deputy governor flagged that fintech operators in the digital lending segment are giving out loans to customers with poor credit profiles and later using aggressive recovery tactics.“While loan sanctioning and disbursement have become increasingly digital, effective collection and recovery still require a 'feet on the street' and empathetic approach. Many fintech platforms operate on a business model that involves extending small-value loans to customers often with poor credit profiles,” Swaminathan J said. Fintech platforms' business models The central bank deputy governor highlighted that many fintech platforms' business models involve providing sm

Credit card spending growth declines on RBI gaze, stress build-up

Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the rep

India can't rely on wealthy to drive growth: Ex-RBI Dy Guv Viral Acharya

India can’t rely on wealthy individuals to drive growth and expect the overall economy to improve, Viral Acharya, former deputy governor of the Reserve Bank of India (RBI) said on Monday.Acharya, who is the C V Starr Professor of Economics in the Department of Finance at New York University’s Stern School of Business (NYU-Stern), said after the Covid-19 pandemic, rural consumption and investments have weakened.We can’t be pumping our growth through the rich and expect that the economy as a whole will do better,” he said while speaking at an event organised by Elara Capital here.f there has to be a trickle-down, it should have actually happened by now,” Acharya said, adding that when the rich keep getting wealthier and wealthier, they have a savings problem. “The bank account keeps getting bigger, hence they look for financial assets to invest in. India is closed, so our money can't go outside India that easily. So, it has to chase the limited financial assets in the country and

CA Online

Search This Blog