Do not drag rating agencies to courts: Sebi to India Inc

Oct 18 2012, 01:00 IST
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SummaryMarket regulator Securities and Exchange Board of India (Sebi) on Wednesday said that it expected due diligence by credit rating agencies to be sacrosanct and that methodologies followed should be recorded

Market regulator Securities and Exchange Board of India (Sebi) on Wednesday said that it expected due diligence by credit rating agencies to be sacrosanct and that methodologies followed should be recorded.

A day after his meeting with the rating agencies on Tuesday, Sebi chairman UK Sinha while addressing the India Securitisation Summit here said, “The due diligence has to be sacrosanct.”

Sinha also highlighted the issue of companies pulling rating agencies into litigation because of their discomfort with the rating and the commentary thereof.

“I think good sense will prevail upon the companies and I am also sure that all the courts in the country are aware that if Sebi is regulating a particular industry... I hope and expect that they will let the due process prevail,” said Sinha.

He also suggested that corporates should be willing to follow the rules if they are raising money from the public, both institutional and retail investors. Sinha also touched upon the need for a better communication of a revision in rating by rating agencies in case a firm defaulted.

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