When bonds issued by IL&FS and its subsidiaries defaulted in September, it led to a liquidity freeze in the markets that engulfed non-banking financial companies as well. Credit rating agencies (CRAs) took flak for failing to downgrade the company’s bonds gradually and in advance of the defaults. On November 13, the Securities and Exchange Board of India (Sebi) published a circular that has enhanced the disclosures that CRAs will have to make. And this move was needed, say experts. A Balasubramanian, CEO, Birla Sunlife Mutual Fund explains: “When an IL&FS-kind of situation happens, the methodology of ratings needs a rethink.”