1. Sebi to act tough against rating agencies for lapses

Sebi to act tough against rating agencies for lapses

Unhappy with credit rating agencies for limited disclosure when they suspend ratings, Sebi Chairman U K Sinha today said the regulator cannot "tolerate" these practices as investors have the right to know about the reasons behind such moves.

By: | Mumbai | Published: May 25, 2016 6:05 PM
Sebi is considering reducing the sector exposure limits for debt schemes to address concerns over the risks associated with their investments in distressed corporate bonds.(PTI) Hinting at a major overhaul of regulations governing rating agencies, Sinha said Sebi is working on “three-four things” in this regard including on mandatory disclosure of reasons for suspension of ratings. (PTI)

Unhappy with credit rating agencies for limited disclosure when they suspend ratings, Sebi Chairman U K Sinha today said the regulator cannot “tolerate” these practices as investors have the right to know about the reasons behind such moves.

Hinting at a major overhaul of regulations governing rating agencies, Sinha said Sebi is working on “three-four things” in this regard including on mandatory disclosure of reasons for suspension of ratings.

“If a bond market investor suddenly finds that a rating has been suspended, it must be explained. If a rating agency can give ten reasons for an upgrade or a downgrade, it must explain the suspension also and it cannot be dismissed in one sentence. Sebi won’t tolerate that.

“Some kind of coordination was also found to be lacking in the functioning of credit rating agencies. We have already introduced uniform rating symbols. Besides, we are very strict with giving licenses for credit rating agencies. I can’t make it easy as mushrooming of CRAs is not something that we want to encourage,” Sinha said.

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