Sebi may issue new circular on loan default disclosures
markets regulator withdrew the loan default disclosure circular without assigning a reason on Friday, 29 September. The sudden withdrawal, a day before listed firms would need to disclose their defaults, sparked speculation about the fate of the circular.
According to three people with knowledge of the matter, including a official at the Securities and Exchange Board of India (Sebi), the regulator will issue a new circular on the disclosure norms that will address some concerns raised by banks and companies.
“The circular has been deferred for technical reasons, not withdrawn completely. A more thought-out version would be released soon,” said the Sebi official. An email sent to Sebi went unanswered.
According to one of the two other people cited above, Sebi’s decision to withdraw the circular came on the back of industry feedback.
“Industry (officials) had raised concerns that disclosure does not define what is a default as per Sebi norms. Broadly, Sebi was also considering default as defined under the Insolvency and Bankruptcy Code (IBC). Under that, even a Rs1 lakh of non-payment and technical defaults would need to be disclosed. This could have led to a run on the company. The new circular would address these concerns,” said the second person.