A spate of defaults by some NBFCs has forced capital markets regulator Sebi to come out with a new set of measures to secure the interest of debenture holders and shore up their confidence in the regulatory mechanism to check any wrongdoings.
In a new consultation paper, the Securities and Exchange Board of India (Sebi) has proposed a detailed review of the regulatory framework for Corporate Bonds and Debenture Trustees (DTs).
As per the consultation paper, non-banking financial companies (NBFCs) will now be required to create an identified charge on the assets, as the pari-passu floating charge in case of recent defaults of NBFCs in secured loans has created confusion as to whether the debentures are really secured.
According to the regulator, creation of an identified charge by NBFCs will enable liquidation of asset and
return of debt quickly to the investors in the event of any default.
Recently, in the case of Reliance Capital, two trustees representing secured lenders had moved the court claiming rights on the same assets.