The share price of CARE Ratings plunged by over 8 per cent on Thursday afternoon after the agency said its Chairman S B Mainak has resigned after stock market regulator Securities and Exchange Board of India (SEBI) reportedly asked for his removal.
Rating agencies have come under severe criticism for missing warning signs like Infrastructure Leasing and Financial Services (IL & FS) rocketing debt load beyond normal levels.
The default of infrastructure financier reverberated the country's credit markets and triggered a liquidity crisis which has crippled non-banking finance companies.
SEBI nudged the rating agency after a forensic report said Mainak had asked his staff to not change the ratings of IL & FS, the bankrupt shadow banker.
Consultancy firm Ernst & Young (EY) had earlier given SEBI a report recording employee statements, WhatsApp messages and call recordings of CARE employees.
In December 2019, CARE's Managing Director and Chief Executive Officer Rajesh Mokashi resigned after a whistleblower complaint alleged management interference in ratings of companies, including IL & FS.
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He was sent on leave in July till further notice after an anonymous complaint was filed against him at the SEBI.
In August last year, Moody's India arm ICRA sacked its Managing Director and Chief Executive Officer Naresh Takkar after whistleblower allegations.
At 12.45 pm, the agency stock was trading 8.26 pc lower at Rs 533.40
.