RCom set­tles case with SEBI over vi­o­la­tion of list­ing norms

The Hindu Business Line - - FRONT PAGE -

SEBI and Reliance Com­mu­ni­ca­tions have set­tled a case against the com­pany for its fail­ure to in­form rat­ing agen­cies about its debt de­fault, for which the mar­ket reg­u­la­tor had im­posed a fine of ₹62.4 lakh for vi­o­la­tion of list­ing norms.

RCom had failed to in­form credit rat­ing agen­cies that it had missed a non-con­vert­ible deben­ture in­stal­ment of ₹375 crore that was due on Fe­bru­ary 7, 2017.

The set­tle­ment or­der, is­sued by SEBI’s whole-time mem­bers S K Mo­hanty and Ananta Barua, was put out on the SEBI web­site on Fri­day. It did not give de­tails of the set­tle­ment, the amount of fine that RCom fi­nally paid, and the rea­sons that led SEBI to set­tle the case. How­ever, it said the set­tle­ment terms were ap­proved by a high-pow­ered ad­vi­sory com­mit­tee.

“The Com­mit­tee in its meet­ing held on Septem­ber 3 con­sid­ered the set­tle­ment terms and rec­om­mended the case for set­tle­ment upon pay­ment of ₹62,40,000 by the ap­pli­cant to­wards set­tle­ment charges,” the SEBI or­der said. SEBI’s whole-time mem­bers ac­cepted the Com­mit­tee’s rec­om­men­da­tion and this was com­mu­ni­cated to RCom on Oc­to­ber 19, it said.

Un­der SEBI’s set­tle­ment process, an en­tity is al­lowed to set­tle charges by pay­ing a penalty with­out ad­mis­sion or de­nial of guilt. But un­der new rules, a set­tle­ment can­not be al­lowed if the vi­o­la­tion has a mar­ket-wide im­pact. RCom even­tu­ally did make the deben­ture pay­ment, on April 10, but rat­ing agen­cies said the de­layed pay­ment came to light only when the com­pany an­nounced its March quar­ter re­sults on May 27. For a rat­ing agency, a de­layed pay­ment counts as de­fault. On May 30 last year, rat­ing agen­cies CARE and ICRA down­graded RCom’s out­stand­ing debt to de­fault sta­tus.

Pend­ing an in­quiry by SEBI into the is­sue, ICRA placed RCom un­der rat­ings watch, down­grad­ing the ₹5,000-crore NCD pro­gramme three notches from its BBB+ sta­tus in Septem­ber 2016s — to BBB, BB and D — through May. Through May, CARE re­vised its rat­ings on the NCD is­sue from A- to BB to D.

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