Mainak resigns as CARE Ratings chief after Sebi asks for his removal

S B Mainak has resigned as chairman of CARE Ratings, the company said in a stock exchange notification after the market regulator reportedly asked for his removal.

The Securities and Exchange Board of India (Sebi) nudged the rating agency after a forensic report said Mainak had asked his staff to not change the ratings of Infrastructure Leasing and Financial Services (IL&FS), the bankrupt shadow banker, the Economic Times reported on Thursday.

Consultancy firm EY earlier this week gave Sebi a report recording employee statements, WhatsApp messages and call recordings of CARE employees.

Mainak, a former managing director of Life Insurance Corporation, was an independent director and chairman of CARE Ratings. In December, CARE’s managing director and chief executive officer (MD & CEO) Rajesh Mokashi resigned after a whistleblower complaint alleged management interference in ratings of companies, including IL&FS.

In August 2019, Moody’s India arm ICRA sacked its MD & CEO Naresh Takkar after whistleblower allegations.

Sebi, in December, fined CARE, ICRA and India Ratings Rs 25 lakh each for violating regulations on assigning ratings to non-convertible debentures (NCDs) of IL&FS. Sebi rarely asks companies to remove top officials but it has a lot of say when it comes to key appointments at market intermediaries such as stock exchanges, depository participants and credit rating agencies.