Market regulator Securities and Exchange Board of India (SEBI) has said that banks are currently deliberating on loan defaults that may come under default disclosure norms.
Market regulator Securities and Exchange Board of India (SEBI) is working with banks on how to define loan defaults.
"Banks needs further time to examine and see because there are.varuous type of debt they give so they just want to examinate there is term loan, working capital loan," SEBI Chairman Ajay Tyagi on Monday said on the sidelines of an event.
Moneycontrol had reported on October 4 that SEBI may not be coming out with a circular on loan default disclosure norms any time soon as mounting pressure from banks has made the markets regulator bury it for the time being.
The markets regulator on September 30 withdrew a circular issued in August that mandated corporates to reveal details of their loan default – either interest payment or principal repayment – within a day’s time of default.
Sources had then said that the circular may not see the light of day in the near future since banks had been petitioning both SEBI and the finance ministry over the last couple of months, saying loan default disclosures will end up increasing their provisioning burden.
“SEBI means well when it says it wants to implement the default disclosure norms. However, at this point in time, banks don’t have enough money and this circular will increase their provisioning amount (money banks have to set aside for doubtful loans),” an official from the finance ministry had told Moneycontrol.
Seeking consensus, SEBI had asked banks to come out with a report on the matter. A source close to the development told Moneycontrol that the capital markets regulator will implement the circular when banks completed their study and submitted it to them.
“The regulator is worried about the minority shareholders in companies which have defaulted. However, banks are not comfortable with this circular,” the source told Moneycontrol.
