Sebi's new debt disclosure norms to improve the entire credit system: Dina Mehta

As per Sebi's new debt disclosure norms on October 1, if any listed companies defaulted even on a single day for paying loan or interest on their loan to the bank, it will have to be declared on the stock exchange and the whole world will know. How will these disclosures impact the stocks on October 3 after a long weekend is the big question.

Deena Mehta, MD, Asit C Mehta Investments said initially there could be some reaction on the stocks because of the unexpectedness and uncertainty but as time goes things will likely fall in place.

There are a bunch of companies marked as special mentioned account (SMA) 1 companies where interest hasn’t come for over 31 to 59 days and there are SMA 2 companies where interest has not come in over 60 days and over 90 days becomes a NPA. However, now from October 3 onwards the defaulting companies will have to make it public themselves.

According to her, our value system does not really consider defaulting as a big black mark but the new norm could definitely help improve discipline among borrowers, since it will be in public eye and will help to improve the entire credit system.

When asked if the timing was right, she said Sebi does not consider about timings while coming out with notifications but there is no need to worry to overly worry about this order.