Tightening the regulatory noose on wilful defaulters of bank loans, the Reserve Bank of India has suggested watchdog Securities and Exchange Board of India that such entities should be prevented from raising funds through capital markets.
To facilitate such restrictions on entities found to have ‘wilfully’ defaulted on bank loans, the RBI is exploring ways to share details of these defaulters with Sebi on a real-time basis, sources said.
Subsequently, these defaulters can be barred from raising funds through capital markets, as also through issuance of securities or other avenues under the jurisdiction of Sebi.
The matter is yet to be discussed by Sebi internally and a final decision could be taken only after taking into account the provisions in various sets of existing laws and the views of all stakeholders, a senior official said.
Currently, the information about wilful defaulters of bank loans are shared with Sebi and others, including credit information agencies like Credit Information Bureau (India), or CIBIL, on a quarterly basis.
To prevent defaulters from accessing other funds, while not honouring the claims of their existing lenders, RBI also wants CIBIL and other credit information agencies to get the names and other details of such entities on a real-time basis, or as soon as an entity is declared ‘wilful defaulter’ by any of the banks.
The proposal comes against the backdrop of spiralling bad loans in the banking system, especially fuelled by increasing number of wilful defaulters.
All-in-cost cap for ECBs extended
The enhanced all-in-cost ceiling for external commercial borrowings has been extended till December 2014. "On a review, it has been decided that the all-in-cost ceiling for external commercial borrowings (ECBs) will continue to be applicable till December 31, 2014, and is subject to review thereafter," an RBI circular said. The ceiling had expired on June 30, 2014. All-in-cost ceiling involves every cost in a financial transaction. By comparing all-in costs, borrowers can compare net gain potential. It helps them understand true cost of loans, including closing costs and interest, and to evaluate both their ability to pay it off and whether the borrowing is worth that expense. The all-in-cost ceiling includes arranger fee, upfront fee, management fee, handling/processing charges, out of pocket and legal expenses.
Source : http://www.financialexpress.com/
To facilitate such restrictions on entities found to have ‘wilfully’ defaulted on bank loans, the RBI is exploring ways to share details of these defaulters with Sebi on a real-time basis, sources said.
Subsequently, these defaulters can be barred from raising funds through capital markets, as also through issuance of securities or other avenues under the jurisdiction of Sebi.
The matter is yet to be discussed by Sebi internally and a final decision could be taken only after taking into account the provisions in various sets of existing laws and the views of all stakeholders, a senior official said.
Currently, the information about wilful defaulters of bank loans are shared with Sebi and others, including credit information agencies like Credit Information Bureau (India), or CIBIL, on a quarterly basis.
To prevent defaulters from accessing other funds, while not honouring the claims of their existing lenders, RBI also wants CIBIL and other credit information agencies to get the names and other details of such entities on a real-time basis, or as soon as an entity is declared ‘wilful defaulter’ by any of the banks.
The proposal comes against the backdrop of spiralling bad loans in the banking system, especially fuelled by increasing number of wilful defaulters.
All-in-cost cap for ECBs extended
The enhanced all-in-cost ceiling for external commercial borrowings has been extended till December 2014. "On a review, it has been decided that the all-in-cost ceiling for external commercial borrowings (ECBs) will continue to be applicable till December 31, 2014, and is subject to review thereafter," an RBI circular said. The ceiling had expired on June 30, 2014. All-in-cost ceiling involves every cost in a financial transaction. By comparing all-in costs, borrowers can compare net gain potential. It helps them understand true cost of loans, including closing costs and interest, and to evaluate both their ability to pay it off and whether the borrowing is worth that expense. The all-in-cost ceiling includes arranger fee, upfront fee, management fee, handling/processing charges, out of pocket and legal expenses.
Source : http://www.financialexpress.com/
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