Regulators working on tighter norms for promoter pledged share funds

RBI, Sebi, Irdai and PFRDA to work closely on new framework

Promoters’ pledge of their shareholding to raise funds is set to come under closer regulatory scrutiny, and a review of guidelines in this matter is in the offing owing to risks arising from excessive leverage and the linkages between financial intermediaries.

The Reserve Bank of India (RBI), Securities and Exchange Board of India (Sebi), Insurance Regulatory and Development Authority of India, and Pension Fund Regulatory and Development Authority are expected to work closely to review the regulatory framework of the subject.

Among the areas the regulators can be expected to look at are the end use of funds after the pledge, the