Shares of pharma packaging company Bilcare Limited, which were locked in 20% upper circuit yesterday, are down over 6% today at Rs. 53.80 a share, when broader markets are also down 600 points. Market regulator SEBI has proposed restrictions on willful defaulters’ fund raising ability, so as to curb the growing menace of bad loans in books of PSU banks.

While RBI along with Finance Ministry have been very vocal to come down hard on the companies which have the ability yet do not pay back loans to lenders, SEBI has now proposed that companies in which a promoter, director or subsidiary is declared a willful defaulter not be allowed to make a public issue of equity, debt securities, or non-convertible redeemable preference shares.

RBI had last year passed tough rules on willful defaulters, which included making parent companies guaranteeing loan obligations responsible, if the subsidiary is declared a willful defaulter. Thus, RBI and SEBI are trying to squeeze out liquidity from all the channels (debt and equity respectively) so that wilful defaulters are taken to task, at a systemic level.

In 2013, United Bank of India had labeled Bilcare as a willful defaulter, which has loans worth over Rs. 2,000 crore outstanding, as per its September 30, 2014 consolidated balance sheet. Another listed willful defaulter, S Kumar Nationwide, is also trading down by about 2% today.