Lawstreet Journal

SEBI Accuses CREDAI of “Proxy” Litigation for NBFCs

Lawstreet Journal 12 Jun 2020 12:08am

Image courtesy: Lawstreet Journal Executive SEBI Accuses CREDAI of “Proxy” Litigation for NBFCs

Markets regulator the Securities and Exchange Board of India (SEBI) has accused real estate developers’ association Confederation of Real Estate Developers’ Association of India (CREDAI) (apex body of Private Real Estate Developers Associations), saying it had no right to seek relief for non-banking finance companies (NBFC).

CREDAI has filed a petition in court, seeking relief for NBFCs on interest payment obligations towards holders of Non-Convertible Debentures (NCDs) issued by the NBFCs. In its reply, SEBI has said that mutual funds (MFs) owned over Rs. 200,000 crores (Rs 2 trillion) worth of NCDs issued by NBFCs and Housing Finance Companies (HFCs).

SEBI has accused CREDAI of proxy litigation and asked why it was more concerned about NBFCs than about its members. SEBI has even called CREDAI’s plea as false, frivolous, misconceived, non- maintainable and sought it be dismissed.

SEBI has said that any exemption or deferral for NBFCs on servicing NCD dues could cause chaos and havoc, as it is likely to impact lakhs of retail investors in the mutual funds.

SEBI's reply was in response to the plea filed by the Haryana Chapter of CREDAI. In the petition, CREDAI had red-flagged liquidity concerns about NBFCs, claiming that they were unable to recover dues from borrowers while having to make payments to the NCD holders. Similar concerns were raised by Indiabulls Housing Finance in the Delhi High Court, seeking relief on payment of NCD dues. The company later withdrew is the plea. CREDAI, in its plea, had pitched for a 6-month-freeze on repayment of any… Continue Reading...

Tagged: SEBI   Securities and Exchange Board of India (SEBI)  
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