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The Securities & Exchange Board of India (SEBI) is likely to tighten norms on capital utilisation by the listed companies.
“We are seriously considering stipulating that the capital raised should only be used for the stated purpose”, S Raman, whole-time member of SEBI, said while speaking at a seminar on financial management for small and medium enterprises organised by the Federation of Andhra Pradesh Chambers of Commerce and Industry here on Monday.
Observing that the diversion of funds for purposes other than the stated reasons was on the rise, he said, "I came across a case in which Rs 120 crore capital raised by it was eaten up for the wrong purposes".
Stating that the market had undergone significant positive developments since 1991, he said capital was now costlier for those who did not have a good record.
C V R Rajendran, Chairman and Managing Director, Andhra Bank said SMEs would stand to gain if they go public. “This will improve debt-equity ratios and valuations, besides fetching higher valuations”, he said.
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