CRAs

Sebi proposed guidelines for CRAs to include detailed reasons for rating actions, especially in cases of default and upgrades of default ratings

Markets regulator Sebi on Thursday proposed guidelines for credit rating agencies (CRAs) to include detailed reasons for rating actions, especially in cases of default and upgrades of default ratings. In its consultation paper, the regulator has recommended removing "technical default" from policies due to potential negative market signals and covenant triggers. CRAs have cited operational issues like force majeure events or bank strikes that should be considered in their policies. The proposed guidelines should consider situations like force majeure events, incorrect investor accounts, or government freezes, alongside significant changes to the company's credit risk profile. Under the current guidelines, any delay of one day or shortfall of even Re 1 in payment (principal or interest) from the scheduled repayment date must be recognised as a default, unless rescheduled by lenders before the due date. At present, CRAs can classify certain situations (like minor delays due to ...

As per RBI, an Account Aggregator means a non-banking financial company (NBFC) that undertakes the business of an account aggregator, for a fee, among other services

S&P and Fitch rate India 'BBB-' and Moody's 'Baa3', all indicative of lowest-possible investment grade, but with stable outlook. These ratings are used to judge country's creditworthiness

Capital markets regulator Sebi on Monday came out with fresh guidelines in order to standardise the usage of rating scales used by Credit Rating Agencies (CRAs). Issuer rating or corporate credit rating indicates the degree of safety of the issuer or the rated entity with regard to timely servicing of all its debt obligations. Pursuant to the consultation with the CRAs, standardised symbols and their definitions have been devised for issuer rating or corporate credit rating, the Securities and Exchange Board of India (Sebi) said in a circular, adding that the new guidelines will come into force from January 1, 2023. According to Sebi, 'rating outlook' indicates CRA's view on the expected direction of the rating movement in the near to medium term, whereas a 'rating watch' indicates a CRA's view on the expected direction of the rating movement in the short term. CRA will have to assign a rating outlook and disclose the same in the press release. Also, the regulator has specified ...

Orders it to wind down operations in six months

The monitoring of the circular will be required to be done through half-yearly internal audits

Rating agencies also struggle to find information on default in the event of a non-cooperative entity

Further, it has asked Sebi to share its findings that explain late detection by rating firms

Many experts still feel imposing litigation risk, along with reputational risk, will help discipline CRAs better