Explained: How sensitive is the issue of pledge of shares by promoters?

Extant Sebi rules require disclosure of pledge of promoters' equity, but there's nothing that requires disclosure of the effective leverage

How sensitive is the issue of pledge of shares by promoters? The Reserve Bank of India (RBI) has found it important enough to highlight the issue in three Financial Stability Reports (FSRs) over the past decade — in its December 2013, December 2014 and June 2019 editions. Now that the banking regulator and the Securities and Exchange Board of India (Sebi) are seized of this fund-raise route in the aftermath of the turbulence in the financial markets after Hindenburg’s report on the Adani group, just what were the concerns raised in the FSRs?

The FSR June 2019 noted that a