No trading restriction on stocks going under bankruptcy, says Sebi
Ajay Tyagi, Chairman, Sebi has said there will be no trading restriction on companies going under IBC. However, he cautioned mutual funds industry to not take NPAs as debt transfer.
Key Highlights:
- No trading restriction on stocks going for IBC
- RBI recognised 12 defaulters accounting 25% of banks gross NPAs
- NPA not allowed to be shifted to mutual fund portfolio as debt
Sebi won't put any trading restrictions on stocks that are going to IBC (Insolvency and Bankruptcy Code), Ajay Tyagi, Chairman, Sebi, said at a conference in Mumbai on Thursday.
Tyagi said that funds houses must improve due diligence mechanism and must not to rely only on credit rating agencies for the same.
Talking on mutual funds, Tyagi said, “Bad loans should not be shifted to mutual fund portfolio by the way of debt transfer .”
He cautioned mutual funds industry against letting debt funds bulge and asked to improve their due diligence mechanism.
Recently Sebi provided a helping hand to the Reserve Bank of India (RBI) and government in solving Rs 7 lakh crore non-performing assets crisis.
The market watchdog, on June 21, relaxed distressed assets norms for speedy resolution of NPAs. It also relaxed acquisition rules which allows investors to purchase distress assets from banks.
Also Read: NPAs crisis: Sebi relaxes distressed assets norms for speedy resolution
By end of FY17, banks had gross non-performing assets (NPAs) of 9.5% of gross advances valuing up to Rs 7.65 lakh crore.
GNPAs of a total 21 PSBs stood at Rs 6.19 lakh crore, rising by 19.96% compared to Rs 5.16 lakh crore in the similar period of the previous year.
On June 13, 2017, RBI through its Internal Advisory Committee (IAC) recognised 12 accounts for resolution under IBC.
For accounts more than Rs 5000 crore – where 60% or more exposure was already classified as NPA by banks as on FY16 – immediate reference to resolution through IBC will be made.
These 12 defaulters were from sectors like steel, infrastructure and textile mainly. Proceeding of some of the defaulters are commenced under IBC in last week.
Also Read: Shares of these 12 companies plunge as banks begin meet to resolve NPA issue
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
Retirement Planning: SIP+SWP combination; Rs 15,000 monthly SIP for 25 years and then Rs 1,52,000 monthly income for 30 years
Top Gold ETF vs Top Large Cap Mutual Fund 10-year Return Calculator: Which has given higher return on Rs 11 lakh investment; see calculations
Retirement Calculator: 40 years of age, Rs 50,000 monthly expenses; what should be retirement corpus and monthly investment
SBI 444-day FD vs Union Bank of India 333-day FD: Know maturity amount on Rs 4 lakh and Rs 8 lakh investments for general and senior citizens
EPF vs SIP vs PPF Calculator: Rs 12,000 monthly investment for 30 years; which can create highest retirement corpus
Home loan EMI vs Mutual Fund SIP Calculator: Rs 70 lakh home loan EMI for 20 years or SIP equal to EMI for 10 years; which can be easier route to buy home; know maths
12:11 PM IST