Mumbai: Stating that the recent default by IL&FS has “severely” impacted the trust and confidence of investors, Sebi chairman Ajay Tyagi asked credit rating agencies to monitor closely the end use of funds scanning through a maze of transactions.
While addressing a conference organised by rating agency Crisil, Mr Tyagi said the provision mandating a limited audit review of the accounts of all entities that are to be consolidated with a listed company should also be made applicable even for unlisted holding companies.
“One of the issues that this episode has brought out is the interconnectedness arising as a result of complex corporate subsidiary structures and how the maze of subsidiaries facilitate masking the end use of funds. Proper monitoring of end use of funds, even at the last level of corporate structure is important,” he said.
He also also sees an opportunity for the development of the bond market in amid the NPA crisis in the banking system.
