The shareholding pattern of all credit rating agencies should be made public so that their relationship, if any, with rated companies, could be known, a body constituted by market regulator Sebi has recommended.
"It is important for the members of the public to know that the relationship of the CRA is at arm's length with that of the rated entity, in letter and spirit. Hence, shareholding ownership patterns of all CRAs need to be made public," said the National Institute of Securities Markets (NISM).
NISM is a public trust, set up by Sebi. It assessed the rating agencies on the request of a high-level committee, founded by financial sector regulators.
It also said rating agencies should completely separate their advisory and rating services.
"Some other agencies continue to offer services other than ratings. It is to be ensured that the registered CRA, as a corporate entity, must not engage in any services other than ratings," NISM said.
The high-level committee was set up by a coordinating body between the Sebi, RBI, PFRDA and IRDA after the role of the CRAs came under sharp criticism for their role in the global financial crisis.