Raters can’t offer fee-based services beyond ratings and research, says Sebi
Sebi has expressed its views in this regard in an ‘interpretative letter’ sought by SME Rating Agency of India (SMERA) under the regulator’s informal guidance scheme. In its guidance note, Sebi said its Credit Rating Agency (CRA) guidelines, including those pertaining to rating process and methodology and its records, transparency and disclosures, avoidance of conflict of interest and code of conduct, would apply to ratings of all securities, instruments, loans and other bank facilities.
The Sebi guidelines would apply to ratings of all these services even if they are not regulated by Sebi, but are used by other regulators or their regulated entities, it added.
Besides, a CRA would can not offer any “fee based services to the rated entities, beyond credit ratings and research”, Sebi said while explaining its regulations.
SMERA is a Sebi-registered CRA promoted by Small Industries Development Bank of India (Sidbi) and Dun & Bradstreet Information Services (D&B) in association with leading private, public and foreign banks.
Seeking Sebi's guidance with regard to CRA regulations and their applicability, SMERA had said it provides entity ratings to SMEs, greenfield and brownfield projects, maritime training institutions and micro-finance institutions.
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