SEBI to tighten norms for credit rating agencies

There are six rating agencies in the country -- Crisil, Fitch-promoted India Ratings, Icra and Care Rating, Brickwork and Smera Ratings.

By: ENS Economic Bureau

Mumbai | June 1, 2016 03:14 AM IST

2 min read

<div class="alignleft"> The Sebi move follows reports that rating agencies were offering only limited disclosures when they suspended ratings.

The Securities and Exchange Board of India (Sebi) has indicated that it would tighten the regulations governing credit rating agencies to bring about more accountability.

“We have taken cognisance of a few events and revisiting the credit rating agency (CRA) regulations. The underlying principle behind these norms is to ensure enhanced transparency and accountability. The norms are at a consultation stage and therefore I can’t give a timeline,” Sebi Whole-Time Member Rajeev Kumar Agarwal said.

The Sebi move follows reports that rating agencies were offering only limited disclosures when they suspended ratings. “We cannot tolerate these practices as investors have the right to know about the reasons behind such moves,” Sebi Chairman UK Sinha had told senior editors in an interaction.

[related-post]

“If a bond market investor suddenly finds that a rating has been suspended, it must be explained. If a rating agency can give 10 reasons for an upgrade or a downgrade, it must explain the suspension also and it cannot be dismissed in one sentence. Sebi won’t tolerate that,” Sinha also said.

There are six rating agencies in the country — Crisil, Fitch-promoted India Ratings, Icra and Care Rating, Brickwork and Smera Ratings.

From the homepage