SEBI may allow listing of security receipts by ARCs

SEBI may allow listing of security receipts (SRs) issued by an asset reconstruction company (ARC) on an exchange platform and approve norms for the same at its upcoming board meeting on Thursday, an official told BusinessLine .

Making SRs trade worthy and enhancing capital flows into the securitisation industry top SEBI’s agenda for its last board meeting of the year.

ARCs buy distressed assets — bad loans — of banks/financial institutions at a discount and have a key role in the current environment, where public sector banks are reeling under a huge bad-loan burden.

The government has been making persistent attempts to put the over-the-counter SR market on an exchange platform to enhance its appeal. SEBI had set a 6-9 month timeline to formalise norms for the same.

SEBI may also allow qualified institutional buyers (QIBs) and alternate investment funds (AIFs) to participate in trading of SRs on the exchange platform to widen the pool, the source said.

Finance Minister Arun Jaitley, in his last Budget, had proposed trading in SRs on an exchange platform. The Reserve Bank of India wanted to have more clarity on the class of investors that could trade these instruments and on who could be considered a ‘qualified buyer’ under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. SEBI may address these issues in its norms to be finalised at its board meeting, the source said.

Another item on the agenda for SEBI is approval of final norms for investment advisors. It will also revisit the directive on ‘loan default disclosure’, which will make it mandatory for listed companies to inform stock exchanges about such issues as soon as they occur.

The regulator may impose a 10 per cent cap on shareholding of credit rating agencies and increase their net worth criteria.

SEBI is also expected to apprise its board about the ongoing probe into circulation of Unpublished Price Sensitive Information with regard to various listed companies through WhatsApp messages.

The Kotak Committee report on corporate governance has been put on the back-burner as SEBI chairman Ajay Tyagi is discussing it with government ministries that had opposed several proposals in the report.