New Delhi: Wilful loan defaulters will no longer be able to raise public funds through stocks and bonds, markets regulator Securities and Exchange Board of India (SEBI) ruled today. They will also be barred from taking up plum posts at listed companies.
The move is expected to have a direct impact on beleaguered liquor baron Vijay Mallya as it disqualifies him from the various posts he holds. According to the new rules, any company, its directors or promoters who have been declared as wilful defaulters will be barred from taking control of another listed company.
These restrictions would apply to every individual and company declared as wilful defaulter as per the Reserve Bank norms.
“How can you trust an individual who has been declared a wilful defaulter by the RBI but continues to increase risks?” SEBI Chairman U K Sinha said, adding that the new rules that have been approved by the SEBI Board will take effect after being notified in four to six weeks.
Besides, SEBI has also decided to bar such defaulters from setting up market intermediaries such as mutual funds and brokerage firms.
The move assumes significance in the wake of a raging controversy over UB Group Chairman Vijay Mallya, who has exited the country amid continuing efforts by the banks to recover dues totalling over Rs 9,000 crore of unpaid loans and interest.
Mallya recently resigned as Chairman and Director of United Spirits Ltd as part of a sweetheart deal with the company's new owner Diageo, a deal which itself is under SEBI’s scanner. He, however, remains on board of various other companies including those from his UB Group as also a few others including Indian subsidiaries of some multinational companies.
(With PTI inputs)