The Securities and Exchange Board of India (Sebi) board has set a limit of 31 days for listed companies to disclose to the stock exchanges any event of a default. The capital markets regulator set January 1 as the effective date for the new rule.
Hetal Dalal, COO of IiAS and Hiren Ved of Alchemy Capital spoke at length about the implications of this decision.
“More disclosure is always good. The previous one left very little time for disclosure. Here at least people know beforehand that there is a 30-day period,” said Ved.
“Therefore, whatever arrangements they have to make even if they have to with the bankers, I think 30 days is a good enough time and more disclosures help in better price discovery,” he observed.
Talking about PMS ticket, Ved said, “I think this was coming and Rs 25 lakh ticket size was initiated 25 years ago when the PMS regulation started. Therefore, it’s a very welcome step.”
“We are already seeing that structurally retail money is moving to the mutual funds and this will only enhance the push to the mutual fund, and for the PMS, they can deal with the high net worth and the ultra-high net worth individuals,” Ved added.
Hetal Dalal of IiAS said the fact that Sebi has asked companies to disclose default in bank loan after a 30-day period is an extremely good measure for the market.
“Now that we have a 30-day timeline, it will encourage companies to close any negotiations they have with banks and vis-à-vis with a 30-day timeline and therefore it will put that degree of compulsion for debt repayment to be that much more serious in the banking sector,” Dalal added.