Cracking its whip on wilful loan defaulters, markets regulator SEBI (Securities and Exchange Board of India) on Saturday decided to bar them from raising public funds through stocks and bonds, and taking positions on the boards of listed companies.
The regulator has also decided to bar such defaulters from setting up market intermediaries, such as mutual funds and brokerage firms. The defaulters would also be not allowed to take control of any other listed company.
The move assumes significance in the wake of a raging controversy over UB Group chairman Vijay Mallya, who has exited the country amid continuing efforts by the banks to recover dues totalling over Rs. 9,000 crore of unpaid loans and interest.
Mr. Mallya recently resigned as chairman and director of United Spirits Ltd. as part of a deal with the company’s new owner Diageo, a deal which is under SEBI’s scanner. He, however, remains on the boards of various other companies.
Addressing reporters after an important board meeting of SEBI, which was also addressed by Finance Minister Arun Jaitley, the regulator’s chairman, U.K. Sinha, said the new rules on restraining wilful defaulters would come into effect after they get notified.
“After the notification, all the persons would stand disqualified from all positions at listed companies,” Mr. Sinha said, but refused to comment on any individual.
These restrictions would apply to every individual and company declared as wilful defaulter as per the Reserve Bank norms.
