Reforming ratings

New norms will increase transparency

The Securities and Exchange Board of India (Sebi) last week released a circular modifying the credit-rating system in ways that would aid in transparency. These changes in regulations are applicable to already listed debt securities, and also to those proposed to be listed. In particular, credit-rating agencies (CRAs) are being asked to do the following important things. They must standardise the methodology for what is termed a “sharp rating action”. CRAs are also being told to highlight non-cooperating issuers along with mentioning the reasons why they may withdraw a rating in cases where they do so. Additionally, CRAs have been