Securities and Exchange Board of India (SEBI) has deferred implementation of its stipulation asking listed companies from reporting payment default of interest on bank loan or instalments till further notice.
In a statement issued on Friday, SEBI said it has decided to defer implementation of its circular dated August 4 "until further notice" without giving any reason for the deferment.
Last month in a detailed circular, SEBI stipulated that listed companies have to disclose to the stock exchange in case of default in payment of interest/loan instalments to banks and financial institutions from October 1 onwards.
"Corporates in India are even today primarily reliant on loans from the banking sector. Many banks are presently under considerable stress on account of large loans to the corporate sector turning into stressed assets/Non performing Assets (NPAs). Some companies have also been taken up for initiation of insolvency and bankruptcy proceedings," SEBI said in August.
Prior to the August circular, a listed entity has to disclose to the stock exchange about any payment default in case of securities issued like debentures and others. Default of interest payment or instalment payment to banks were not covered.
In order to address this gap, SEBI came out with its circular in August stipulating listed corporates to disclose any payment defaults to stock exchanges.
According to SEBI, default shall mean non-payment of interest or principal amount in full on the pre-agreed date.
The disclosure should be made within one day from the date of default.