Ashvin Parekh of Ashvin Parekh Advisory Services on loan against shares

Mutual fund investors have learnt over the past few months that many Indian promoters have relied heavily on pledging their shares and raising money from mutual funds to support their core and non-core business activities. The sharp fall in the prices of these pledged shares has resulted in a sticky situation for a lot of the funds and the non-banking financial companies (NBFCs) and the result was standstill agreements is what came to know of in the case of Essel promoters and later on with the Anil Dhirubhai Ambani Group (ADAG) as well. Ashvin Parekh, managing partner of Ashvin Parekh Advisory Services spoke at length about some of these issues that market is grappling with.