SEBI or the 'Securities and Exchange Board of India' plays a crucial role in regulating all the individuals operating in the Indian stock market. Their main objective is to protect the investor’s interests and develop the capital market by releasing different regulations and rules. They primarily monitor and regulate Indian capital and securities while keeping the investor’s interest safe. They aim at the development of the securities market and regulate the business.
The SEBI also provides a platform to the stockbrokers, portfolio managers, investment advisors, share transfer agents, merchant bankers, bankers, registrars, underwriters and other associated people to register and regulate the work. They also regulate the operations of depositories, participants, custodians of securities, credit rating institutions and international portfolio investors.
Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) provides information about the disclosure of divergence involving asset classification and provisioning by banks. Some clauses included in Regulation 30 include:
- A listed entity must disclose all the relevant information or events to the stock exchange as soon as possible and before a day’s time from the event’s occurrence.
- The SEBI (prohibition of Insider Trading) regulations mandate the disclosure of unpublished important information, affecting the price discovery no sooner than credible knowledge comes forward.
- Mandated banks must disclose specific cases of divergence in asset classification and provisioning in the Notes to Accounts for the Annual Financial Statements, which are launched when the divergence information is provided to the bank.
- The disclosure requirements should be provided to all banks that have specified securities.
- The disclosures regarding the divergence and provisioning are for the material events and information. Therefore, it is important to necessitate immediate disclosure.