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The Securities and Exchange Board of India is likely to tighten the norms on capital utilisation by listed companies.
“We are seriously considering to stipulate 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 to purposes other than the stated reasons was on the rise, he said: “I came across a case in which ₹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 had now become costlier for those who did not have a good record.
CVR Rajendran, Chairman and Managing Director, Andhra Bank, said the SMEs would stand to gain if they go public. “This will improve debt-equity ratios and valuations,” he said.
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