Corporates in India are increasingly resorting to pledged shares to secure funding following tighter lending rules and financing difficulties, lawyers warn of troubles in the structure.
India’s stricter debt recovery rules will impose internal scrutiny on corporate’s directors and guarantors, as the new rules make loans to violators ‘impossible’.
Six new enforcement agencies will be set up in India to help banks recover debt by selling the defaulter’s asset. The move is a sign of the new government’s harsher stance on bad loans.