Raters need a Swachh Abhiyan

The biggest reform, however, will be to ask CRAs to separate their rating entity and their non-rating businesses in order to avoid conflict of interest

One of the most damning indictments of credit rating agencies (CRAs) came in 2010, when the Financial Crisis Inquiry Commission, which investigated the causes of the financial crisis in the US, termed Moody’s a “triple A factory” whose expansion drove a six-fold jump in its stock price from 2000 to 2007. Though Moody’s and its peers have said that they have learnt their lessons and have reformed many of their controls and procedures, uneasiness remains about the way CRAs function.

Though no CRA in India, including Moody’s and Fitch which operate in the country through local partners, has been dubbed