SEBI issues new guidelines to enhance credit rating agency operations
Mumbai: The Securities and Exchange Board of India (SEBI) has issued updated directives to streamline processes and improve business efficiency for credit rating agencies, media reported.
The guidelines include defined timeframes for handling appeals from companies regarding rating adjustments made during regular rating assessments.
These changes will come into effect from August 1, 2024, as stated in SEBI circular issued on Thursday.
"In order to promote ease of doing business and bring about uniformity in dealing with appeals, based on consultation with stakeholders, including CRAs (Credit Rating Agencies), it has been decided to provide specific timelines for dealing with appeals made by the issuer in respect of rating actions carried out pursuant to periodic surveillance of ratings," it added, reported Business Standard.
The new requirements stipulate that credit rating agencies (CRAs) must notify companies of their ratings within one business day following the rating committee meeting, ensuring timely communication.
The companies will also have up to three business days to request a review or appeal of the rating decision.
Furthermore, CRAs are obligated to publish a press release on their website and inform the stock exchange or debenture trustee within seven business days from the rating committee meeting.
"CRAs shall continue to maintain records in respect of the said disclosures for a period of 10 years, which may be shared with debenture trustees upon request.
"Further, disclosures in respect of the said aspects shall continue to be made available by the CRAs on their website under the issuer-specific press releases/ rating rationale section of the respective issuer, wherever applicable," the regulator said, according to the report.
SEBI has established clear schedules for particular disclosures, including a daily update of a roster of uncooperative issuers, ensuring timely notification to stakeholders about issuers who do not collaborate with rating agencies.
Regarding ratings that issuers do not endorse, CRAs must retain this data for a year.
To ensure compliance, the circular will be monitored through the half-yearly internal audit for credit rating agencies, as mandated under the CRA norms, SEBI said.
The objective is to maintain investor protection and promote the growth and oversight of the securities market.
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