CARE Ratings has sent its MD & CEO Rajesh Mokashi on leave following a complaint received by capital markets regulator SEBI, in an action that experts say may do unintended harm to the markets rather than stabilising the conditions immediately.
CARE Ratings has sent its MD & CEO Rajesh Mokashi on leave following a complaint received by capital markets regulator SEBI, in an action that experts say may do unintended harm to the markets rather than stabilising the conditions immediately. The actions are too little and too late, veteran investment advisor Sandip Sabharwal told Financial Express Online. Rajesh Mokashi has been sent on leave with immediate effect, until further notice, CARE Ratings said in a regulatory filing late Wednesday evening. CARE Ratings action comes weeks after another rating agency ICRA, also a local affiliate of Moody’s Investors Service, sent its MD & CEO Naresh Takkar on leave, pending an enquiry into anonymous allegations against the executive.
However, the action on ratings agencies bosses may make the going even more difficult for the companies undergoing a tough market and tight liquidity right now. “At this stage [such actions] can make the junior staff in these agencies trigger happy and they might downgrade companies which actually should not be downgraded and just put on watch. It is an unhealthy development,” Sandip Sabharwal said. On the other hand, the questions that are being raised around the country’s rating agencies have made fundraising tough, Saurabh Mukherjea, Marcellus Investment Managers, told CNBC TV18 in an interview.
The rating agencies are facing criticism after a series of debt defaults were reported in the corporate sector. The critics claim that the agencies delayed downgrading these borrowers before they defaulted on their payments to the lenders. The board of directors of CARE Ratings has decided to appoint TN Arun Kumar, currently Executive Director (Ratings), as interim CEO of the company. “The board of directors of CARE has decided to appoint T.N. Arun Kumar, currently executive director (Ratings) as interim chief executive officer (“CEO”) of the company. He will not be part of rating operations to ensure independence of ratings,” said CARE Ratings in the regulatory filing.
CARE Ratings declined to comment to a query by Financial Express Online, saying, “The matter is under investigation and we cannot comment on specifics”.
Meanwhile, shares of CARE Ratings were trading at Rs 862, down 45.15, or 4.98% on NSE at the time of reporting.