“Though this was done to protect the investor and realise the full value of debentures/ bonds that were issued, due to market forces the value of stock prices came down and the pledged value would be lower than the loaned amount,” adds Mehta.
The new norms are expected to take the view of the actual investors before entering into such an agreement. But the caveat is, if the process of seeking consent takes a lot of time, it will probably not be relevant on the day of executing the trade.
As per the Pratapsingh Nathani, Chairman and Managing Director, Beacon Trusteeship, a Sebi-registered debenture trustee business, the mere signing of ICA would not suffice and there is a need to form a small committee of creditors to take quick action in the cases involving multiple lenders or creditors. As per the current dispensation, the DT does not have powers to accept a haircut/ sacrifice, which is the norm in all ICA cases.