Credit rating agencies (CRAs) will have to form a review committee of mostly independent members to decide on any request for a rating review and will have to disclose on their website all ratings that are not accepted by an issuer for at least 12 months.
As part of its attempts to strengthen the governance, accountability and functioning of CRAs, the Securities and Exchange Board of India (SEBI) has proposed these measures following a consultation paper issued in September 2017.
In the interest of transparency and fairness, it has been decided that all cases of requests by an issuer for review of the ratings provided to its instruments by the CRA, shall be reviewed by a Rating Committee of the agency that shall consist of a majority of independent members, stated a SEBI circular.
‘Independent’ definition
The statement added that ‘independent’ would mean “people not having any pecuniary relationship with the CRA or any of its employees.”
Further, the capital market watchdog has said that all non-accepted ratings will have be disclosed on the CRA’s website for a period of 12 months from the date of disclosure of such ratings.
