The capital market regulator has tightened disclosure norms for reporting loan defaults, a move that will help investors draw an informed conclusion about a firm’s financial health and prevent a sudden erosion of their wealth when such an event is discovered—as was the case in recent instances. Any default in repayment of principal or interest to lenders by listed companies which continues beyond 30 days from the pre-agreed payment date will have to be disclosed to shareholders within 24 hours of such an event, the Securities and Exchange Board of India (Sebi) said in a statement after a board meeting on Wednesday. The rule will take effect on 1 January. Over the past year, several listed entities have defaulted on their loan repayments but failed to disclose these to investors. The revelations, whenever they happened, resulted in a sharp decline in prices of securities issued by them. Currently, there is no Sebi norm that requires any listed entity or its promoters to disclose repayment defaults to the market. Instances of loan defaults have increased since financier Infrastructure Leasing and Financial Services Ltd defaulted on its payment obligations last year. Sebi’s new mandate on default disclosure norms comes after two years of back and forth with companies, banks and the Reserve Bank of India (RBI). In an earlier version, borrowers were required to disclose even a one-day default. The change to 30 days addresses criticism that a one-day default could be on technical grounds and may not be material. Sebi also reduced the timeline for completion of rights issues by listed companies. At present, a firm is required to complete its rights issue within 55 days from the date of the opening of the issue. Sebi has reduced this to 31 days. The capital market regulator increased a portfolio manager’s net worth requirement from ₹2 crore to ₹5 crore. Existing portfolio managers need to meet the enhanced requirement within three years, it said. Sebi also doubled the minimum investment requirement in portfolio management service funds to ₹50 lakh.