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Tightening its disclosure norms for listed companies defaulting on loans taken from banks and other financial intuitions, regulator Securities and Exchange Board of India (SEBI) today asked firms to make such information public within one working day.
This would come into force from October 1, the SEBI said in a circular.
“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, non-performing assets (NPAs). Some companies have also been taken up for initiation of insolvency and bankruptcy proceedings,” SEBI noted.
In order to address this critical gap in the availability of information to investors, the regulator has asked listed entities to inform exchanges in case it has defaulted in payment of interest, instalment obligations on debt securities, loans from banks and financial institutions and external commercial borrowings (ECBs).
The companies would have to inform stock exchanges about date of default as well as date of making such disclosure, name of the lender, number of investors in the security as on date of default, details of the obligation, current default amount and gross principal amount on which the default has occurred.
“The entities shall make disclosures within one working day from the date of default at the first instance of default in a specified format," SEBI said.
Listed entities entity would also separately provide information pertaining to defaults to the concerned credit rating agencies in a timely manner and as may be specified by the regulator from time to time.
Last month, the regulator had asked listed banks to make disclosures if provisioning and NPAs assessed by RBI exceeded 15 per cent of published financials.
Sebi had said that such disclosures should be made along with the annual financial results filed immediately following communication of such divergence by the RBI to the bank,
The move is aimed at helping banks to recognise their stressed assets as non-performing more uniformly.
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