SEBI may give 30-day window for cos to disclose short term loan defaults

The Securities and Exchanges Board of India (SEBI) may give a 30 day-window for listed companies to inform stock exchanges about defaults on working capital loans, sources told Moneycontrol. This means that companies will have to disclose such defaults within 30 days from the day of default. The issue will come up for discussion at the upcoming board meet of the regulator on Thursday.

In the case of long-term loans, companies may be asked to disclose a default as soon as it occurs.

Some months back, SEBI had proposed that companies should disclose the default — whether on short term loans or long term loans — the moment it occurred. Following pressure from corporates, SEBI was forced to withdraw the proposal.

This time, however, the regulator is confident that it will be able to implement the rule of disclosure of loan defaults before the end of this financial year.

In addition, SEBI will discuss the issue of universal exchange at the board meet, sources told Moneycontrol. The regulator is in the process of finalising the rules for universal exchanges as well as setting a deadline for implementing them.

A universal exchange is one that can offer both securities and commodities trading. Such exchanges will not have to set up a different entity to offer a platform for commodities trading or equities trading, as is the case at present.

Commodity exchanges, however, are seeking more time to implement the rules for universal exchange. At the time of merger of the SEBI and Forward Market commission in September 2015, commodity exchanges were given three years for setting up clearing corporations.

Last month, SEBI chairman Ajay Tyagi conducted meetings with officials of both stock and commodity exchanges to know their views on universal exchange.

The stock exchanges say they are ready to start any time once the approvals are in place.

Bombay Stock Exchange (BSE) Managing Director Ashish Chauhan told Moneycontrol, “SEBI is serious about implementing universal exchange. When unified brokers (brokers offering both stock trading and commodities trading) is set to become a reality shortly, why not exchanges?”.

Commodity exchanges Multi Commodity Exchange and National Commodity Derivative Exchange are both requesting that they be given two to three years for implementing universal exchange.

Another source told Moneycontrol, “SEBI may not give a delay of more than six months in implementing universal exchange. Even Finance Ministry wants to implement the  universal exchange early as the Budget speech has already mentioned the  integration of commodity and stock markets”.