Pledging of Shares by Promoters of Family Firms in India: Regulatory Concerns and Recommendations

Sep 21, 2023

Rogue corporates wilfully defaulting on their debts have for long been the bane of Indian banks. There is another threat looming on the horizon – promoters pledging their shares to raise bank loans. What happens if the prices of these pledged shares were to plummet? How could margin calls lead to controlling shareholders losing control of the firm? What if promoters present false narratives to keep stock prices artificially inflated? Nupur Pavan Bang, Professor Sougata Ray and Professor Kavil Ramachandran suggest measures to reign in rogue promoters from manipulating the market in this insightful article