The Securities and Exchange Board of India (SEBI) Chairman Ajay Tyagi said there is no provision for deferring debt repayment, clearly indicating that the market regulator is also not comfortable with the extension provided to Zee Entertainment Enterprises (ZEE).
The move comes in the backdrop of Essel Group’s announcement on September 25 that its lenders have unanimously agreed to extend the repayment timeline, enabling it to optimise the value output from the sale of its assets. Sources had told Moneycontrol that Essel Group has received a six months extension to repay dues from Aditya Birla Asset Management Company, HDFC AMC, Franklin Templeton AMC, and three others.
"SEBI regulations do not allow any form of standstill arrangements. We don’t know if entities are following the right regulations on standstill arrangements," he said at a FICCI event on September 26.
LIC NSE stake conundrumThe SEBI Chairman said Life Insurance Corporation (LIC) will have to ‘dilute its excess shareholding’ by divesting its additional five percent stake in the National Stock Exchange (NSE) after its acquisition of IDBI Bank caused a breach of the ownership cap set for the members of the stock exchange. IDBI Bank held a little over a percent in NSE and was classified as a trading member. Post-acquisition, LIC’s entire stake and that of IDBI Bank got classified as held by members, which rose from 41.5 percent to 54 percent. However, he was quick to add that he not aware of any deadline by which the insurers would have to comply.
Liquidity crisis and rating agenciesSpeaking of the role of rating agencies in the ongoing liquidity crisis, Tyagi defended them, saying: “Rating agencies are only opinion givers and institutional investors and mutual funds should do their own analysis on any company.”
The crisis was triggered by the surprise default of AAA-rated IL&FS group in September 2018, which had earlier enjoyed high ratings from rating companies due to window-dressing of its books. Its default and others that followed, threatened to disrupt the entire financial sector and economy, prompting the regulator to tighten norms to restore investor faith.
SAT order on PwCSEBI said it is examining Securities Appellate Tribunal’s (SAT) September 9 quashing the two-year ban on audit firm PricewaterhouseCoopers (PwC). The regulator is considering approaching the Supreme Court to contest the SAT ruling. Also read: SAT order on PwC a wake-up call for SEBI over jurisdiction
Promoter frameworkThe regulator, he said, is checking if any change is required to with respect to the promoter framework. His comments comes after related-party transactions between companies and promoter entities came under the scanner after the controversies at IndiGo and CG Power.