Source Business standard
| Stringent guidelines for wilful defaulters on the cards |
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Mumbai, 27 June The Union finance ministry is planning to make rules regarding wilful defaulters more stringent, so that criminal charges can be pressed against such entities. The move follows a rise in bad loans, particularly among public sector banks ( PSBs). A senior official of a PSB who discussed the issue with officials of the department of financial services said, "Whenever there is a clear diversion of funds to create personal wealth, the borrower will tagged as a wilful defaulter and criminal charges will be pressed." The ministry has proposed that a promoter or board member classified as a wilful defaulter be barred from becoming a director in any other company. It had also been proposed passports of wilful defaulters be impounded, bankers said. According to the Reserve Bank of India ( RBI) norms, a wilful default is when an entity defaults in its payment obligations to lenders even if it has the capacity to pay and doesn't use the funds for which the loan was availed of, or diverts those. If the borrower uses short- term working capital funds for longterm purposes not in conformity with the terms of the sanction or deploys the borrowed funds for creation of assets other than those for which the loan was sanctioned, it is construed as diversion or siphoning of funds. Criminal charges to be pressed if borrower is found diverting funds to create personal wealth 'Banks should give monthly data about wilful defaulters' The Reserve Bank of India has mandated banks to give data about wilful defaulters each month or more frequently to the credit information companies from the beginning of 2015. According to the new regulations, banks will have to furnish data on wilful defaulters of ₹ 25 lakh and above for the quarter ended December 31, 2014, and of ₹ 1 crore and above for the half year ended December 31, 2014, to credit information firms, and not to RBI. BS REPORTER |
Source The Hindu
SEBI clarifies on employee stock option norms
The Securities and Exchange Board of India, on Friday, said companies were barred from acquiring shares from the secondary market under the employee stock option schemes till the new regulations in this regard were notified.
SEBI has also extended the timeline for companies to align their schemes with that of its guidelines as the watchdog is in the process of preparing new norms.
Earlier this month, the board of SEBI approved certain proposals for framing a new set of regulations concerning the employee stock option scheme (ESOS) and the employee stock purchase scheme (ESPS) dealing in shares of the company. Citing the board's decision, the market regulator said that timeline had been extended for "aligning existing employee benefit schemes with the SEBI (ESOS and ESPS) Guidelines, 1999, till the new regulations are notified.''
"... it is reiterated that prohibition on acquiring securities from the secondary market shall continue till the existing schemes are aligned with the new regulations to be notified," SEBI said in a circular. In a circular issued in November last, SEBI had given time till June 30 for alignment of existing employee benefit schemes with the SEBI (ESOS and ESPS) Guidelines, 1999.
Meanwhile, under the new norms approved by the SEBI board during its meeting on Thursday last, companies would have employee stock option programmes where they could buy their own company shares subject to certain conditions.
The employee stock option is a practice followed the world over and the market regulator has outlined certain safeguards to improve the governance and transparency of the schemes and also address concerns regarding potential market abuse.
Besides, the regulator has decided to classify ESOP Trust as a separate group of shareholding entities.
Some of the safeguards as outlined by SEBI include, requirement of shareholders' approval through special resolution for undertaking secondary market acquisitions; restrictions on sale of shares by trusts; at least six month holding period for shares acquired from secondary market.
Company Secretary
Chennai
93810 11200
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