SB Mainak has quit as chairman and independent director of Care Ratings Ltd amid reports that market regulator Sebi has asked the rating agency’s board to remove him from the position.
The company’s share price fell 6.64 per cent to Rs 542.85 on the BSE Thursday following the development. “Please be informed that due to personal reasons SB Mainak, Chairman & Independent Director of the company has tendered his resignation with effect from February 11, 2020,” the company said in a stock exchange filing. The Securities and Exchange Board of India (Sebi) asked the rating agency’s board to act against Mainak after a forensic report allegedly said he had asked his staff to not change the ratings of IL&FS, which collapsed despite holding the highest rating. The forensic audit, prepared by EY, reportedly found the involvement of Mainak and former managing director and CEO Rajesh Mokashi.
Mokashi resigned in December after a whistleblower complaint alleged management interference in ratings of companies, including IL&FS. Mainak was formerly managing director of Life Insurance Corporation.
In August 2019, Moody’s India affiliate ICRA sacked its MD and CEO Naresh Takkar. He was initially asked to go on leave, after Sebi launched a probe into a nexus between ICRA and IL&FS.
In December, Sebi fined Care, ICRA and India Ratings Rs 25 lakh each for violating regulations on assigning ratings to non-convertible debentures (NCDs) of IL&FS. The crisis at the diversified IL&FS, whose board was superseded by the government, came to light September last year and since then, the company as well as related entities have come under the regulatory lens. In three separate but similarly-worded orders, Sebi said the default by IL&FS occurred due to “lethargic indifference and needless procrastination and laxity” of the rating agencies.
The markets regulator examined the role of credit rating agencies, including ICRA, Care Ratings and India Ratings in assigning rating to various NCDs of IL&FS.
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