The capital market regulator, Securities and Exchange Board of India (SEBI) may ease the acquisition rules to allow investors to buy distressed assets from banks. The market regulator in its upcoming board meeting is expected to come up with an easy pricing formula for an open offer to public shareholders and lock-in requirements for acquirers of distressed companies, based on the demand for extension of these exemptions. At present, such relaxations are given only to banks and the regulator has been granting exemptions to banks acquiring the stock of listed distressed companies. RBI too has been in consultation with Sebi on dealing with distressed companies.
SEBI has been regularly suggesting various measures to tackle the problem of rising bad loans and has received feedback that such exemptions need to be extended to other prospective buyers as well. It recently made several relaxations to the securities regulations to allow a more efficient corporate debt restructuring including easier preferential allotments norms, crackdown on wilful defaulters and open offer relaxation.
The government and regulators have taken several measures to tackle the banking sector nonperforming asset (NPA) problem. Banks have been advised by RBI to reduce NPAs and initiate stringent actions to recover dues from borrowers. Sebi board in its meeting is also likely to tighten offshore derivatives instruments (ODI) or participatory notes (p-notes) regulations.
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