X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Indian Stock Market News, Equity Market and Sensex Today in India | Equitymaster
Investing in India? Get Equitymaster Research  
SEBI proposals aim to reduce loan defaults 
(Wed, 7 Jan Pre-Open) 
 
Indian banks, particularly public sector banks, have been saddled with a lot of bad loans. The major cause has been the policy paralysis during the tenure of the previous government which along with slowdown led to higher defaults by corporate India. This is being tackled by speedy reform measuresin infrastructure by the present NDA government. In addition to this Reserve Bank of India (RBI) feels that banks need to be given additional powers to deal with large defaulters in a more stringent manner. Therefore in a move to crack the whip on wilful defaulters and protect shareholder's interest, stock market regulator SEBI, has proposed a host of punitive measures against them.

Among the proposals suggested by SEBI is that the wilful defaulters should not be allowed to raise funds by selling shares, debt securities and other non-convertible preference redeemable shares to the public. However, wilful defaulters can access capital from existing shareholders through a rights issue or a qualified institutional placement to institutional investors but with full disclosures. Additionally, SEBI has suggested that wilful defaulters be barred from taking over another listed entity but may be allowed to take part in counter offers to thwart hostile takeover bids.

SEBI's proposals aim at tightening the noose around companies that fail to repay debt despite having the wherewithal to do so. By curbing freedom of wilful defaulters from accessing capital markets, SEBI wants to clip their wings and prevent new investors from falling in their trap. The implementation of these measures will go a long way in strengthening the banking system by acting as a deterrent against defaults by huge borrowers.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

View all commentaries | Archives  RSS
Read the latest Market Commentary
 
BSE-30
 

 
Go
 

Equitymaster requests your view! Post a comment on "SEBI proposals aim to reduce loan defaults". Click here!

  
 

Become A Smarter Investor In
Just 5 Minutes

Multibagger Stocks Guide 2017
Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

S&P BSE SENSEX


Jul 21, 2017 (Close)

MARKET STATS