Curbs on large borrowings by firms on cards

“Big entities create big mess. Regulators must explore ways to impose restrictions on big companies from getting excessively leveraged so that there is no systemic failure,” Chairman C B Bhave said while speaking at an ‘Emerging Market Finance Conference’ organised by the Indira Gandhi Institute of Development Research here.

Regulators need to check whether companies are excessively leveraged, he said, without elaborating. “If any sector is over-leveraged for a long time, without doubt it will fail.”

Recently Sebi has told asset management companies (AMCs) to refrain from exposure to real estate debt in certain schemes. The regulator had also directed AMCs to maintain a list of ‘negative sectors’ and give an undertaking that they would not invest in sectors appearing in that list.

Financial innovation must never lose sight of the real world, Bhave said. On the mutual fund industry, the Sebi Chairman said it should focus on bringing down transaction cost to attract more investors to the equity market. India’s saving rate is as high as 40 per cent but not enough savings go into risk capital, he said, adding that participation in risk capital should be increased. “Lowering the cost of transaction is a very important issue for us. Financial innovation must focus on bringing down cost so that more and more people can participate in the equity market,” Bhave said.

All information on websites

Mumbai, PTI:Sebi has asked all listed companies to maintain official websites providing information about their business, shareholding pattern and names of nominees from media companies on their boards.

The directive will take effect from April 1, 2011. Websites will have to contain information on company business, financial information, shareholding pattern, compliance with corporate governance and contact information of officials responsible for assisting and handling investor grievances. It must also contain other disclosures as stipulated by Sebi.