The Securities Exchange Board of India (SEBI) is considering setting up a common defaulter database in order to provide a one-stop reference point for all types of market players such as brokerages, mutual funds, merchant banks, portfolio managers and rating agencies.
The database is being proposed to be set up on the lines of CIBIL (Credit Information Bureau India Ltd.), a repository of credit history information of all commercial and consumer borrowers which would make it easy for any market intermediary to identify a client, person or institution, that has defaulted in the past and thus avoid doing any business with the same.
All market participants, including stock brokers, portfolio managers, depository participants, merchant bankers, underwriters, asset management companies, credit rating agencies, etc would be asked to contribute the names and details of their individual defaulters to this common database.
The repository thus created would serve as a reference database of defaulter clients for the entire spectrum of market participants. SEBI could also make it mandatory for every intermediary to subscribe to such database and update the database with the details of defaulting clients such that other intermediaries may refer to the database before entering into any relationship with a new client.
Source: Hindustan Times Content Team
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