Just a day before the new guidelines related to disclosure of debt default by listed companies was to come into effect, the Securities and Exchange Board of India (SEBI) has deferred the implementation of the norms.
“It has been decided to defer implementation… until further notice,” said a one-line circular issued by the capital market regulator.
In August, SEBI had made it mandatory for companies to disclose any instance of a default on the payment of interest or repayment of principal to banks or financial institutions within a day of the default.
The capital market regulator had said that while current regulations required listed companies to disclose delay or default in payment of interest/principal on debt securities, there was no such requirement when loans were taken from banks or financial institutions.
“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. Some companies have also been taken up for initiation of insolvency and bankruptcy proceedings,” the SEBI circular, had stated while adding that the new norms would come into effect from October 1.
The disclosures were be made to the stock exchanges when the entity defaulted in payment of interest/instalment obligations on debt securities (including commercial paper), medium term notes (MTNs), foreign currency convertible bonds (FCCBs), loans from banks and financial institutions, external commercial borrowings (ECBs) etc.
Companies were also directed to provide information pertaining to defaults to the concerned credit rating agencies in a timely manner.