The department of company affairs (DCA) had recently amended the Public Companies Terms of Issue of Debentures and Raising of Loans with Option to Convert such Debentures or Loans into Shares Rules, 1977, for this purpose.

However, cooperative banks, regional rural banks and foreign banks cannot use these options, the DCA said. Besides, this move comes with a caveat. The department has stated that a public financial institution or a scheduled bank will not convert all or any part of such debentures or loans unless the company that has issued the debentures or raised the loan has defaulted in the repayment or redemption of, or payment of interest on, such loans or debentures.

Further, such scheduled bank or public financial institution will have to give the company notice of its intention to convert such loans or debentures at least 30 days prior to the intended date of conversion.