Lok Sabha Question No. 1073 (UNSTARRED), answered on 2016-04-29
Subject: Loan Defaulters
Ministry: FINANCE
Asked by: BIDYUT BARAN MAHATO, ASHOK SHANKARRAO CHAVAN, GAJANAN CHANDRAKANT KIRTIKAR, KUNWAR HARIBANSH SINGH, SUDHEER GUPTA, SUNIL BALIRAM GAIKWAD, VIJAY KUMAR S.R.

## GOVERNME,NT  OF INDIA MINISTRY  OF FINANCE DE,PARTMENT  OF ECONOMIC AFFAIRS FINANCIAL MARKETS DIVISION

## LOK SABHA UNSTARRED  QUESTTON  NO. 1073 To BE ANSWERED oN FRrDAY,2grn  APRIL,zltltvArSAKIrA  9, 1938 (Saka)

## LOAN DEFAULTERS

## OUESTION

1073. SHRI BIDYUT  BARAN MAHATO: SHRI ASHOK SHANKARRAO  CHAVAN: SHRI GAJANAN IilRTIKAR: KUNWAR HARIBANSH  SINGH: SHRI SUDHEER GUPTA: DR. SUNIL BALIRAM GAIKWAD: SHRI S.R. VIJAYAKUMAR:

Willthe Minister of FINANCE  be pleased  to state:

(a) whether  the Securities  and Exchange  Board of India (SEBD have decided  to bar companies which have been declared wilful loan defaulters along with their promoters and directors from accessing  stock or bond rnarkets  for raising funds in a bid to choke fund flow to the entire group with a colnrlorl  owner;

(b) if so, whether the SEBI has also decided  that wilful defaulters  will also be barred  from taking over another listed  company;

(c)  ifso, the details thereof;

(d) whether  SEBI also proposes norms  requiring companies to disclose  if the bank loans extended to them have been classified  as Non-Performing  Assets (NpAs); and

(e) if so, the details thereof ?

## ANSWER MINISTER OF STATE IN THE MINISTRY  OF FINANCE (SHRI JAYANT SINI{A)

(a)' (b) and (c): The Securities  and Exchange  Board of India (SEBI) has informed that with tlie objective of restricting access of such wilful defaulters  to capital markets  for raising funds from the public,  the following proposals have been approved  by SEBI Board in the rneeting held on March 12,2016:

- l.No issuer shall make a public issue of equity securities / debt securities  / non-convertible  redeemable preference shares, if the issuer  company  or its promoter  or its director is in the list of the wilful defaulters.
- 2.If the issuer company or its promoter  or its director  is in the list of the wilful defaulters,  suclr entity may oome out with rights issue  with adequate  disclosures in the offer document while ensuring that the promoter(s)  or promoter  group of the issuer, shall not renoLrnce  their rights except to the extent  of renunciatlon  within the promoter  group.
- 3.If the issuer company  or its promoter  or its director  is in the list of the wilful defaulters,  such entities may raise money through  private placement  of equity or debt securities  to qualified  institutional buyers, while ensuring adequate  disclosures  in the explanatory statement.
- 4.Any company or its promoter  or its director  categorized  as wilful defaulter may not be allowed to take control over other listed entity. However,  if a listed company or its promoter  or its director is categorized  as wilful defaulter,  and there is a take-over offer in respect  of the listed  company,  they may be allowed to make competing offer for the said listed  company  in accordance  with SEBI (Substantial  Acquiiition  of Shares  and Takeovers) Regulations  ,  2011 .

(d): No, Madam' SEBI has not proposed  any norms  requiring companies to disclose  if the bank loans extended to them have been classified as Non-Performing  Assets (NpAs).

(e): Does not arise in view of reply to (d) above.