Uniform rating norms mooted for all securities

The Securities and Exchange Board of India (Sebi) has further tightened the guidelines for credit rating agencies (CRA). On Thursday, the capital markets regulator said Sebi-registered CRAs that rate securities not regulated by it also need to be governed through the same stringent norms as those applicable for rating of securities issued through public and rights issues.

The regulator had observed CRAs also carry out rating of securities, instruments, loans and other facilities that are provided by banks, but not regulated by Sebi. “Such ratings are being used by other regulators or their regulated entities for specified purposes,” Sebi said. It added CRAs should follow the “applicable requirements” pertaining to the rating process, the methodology, its records, transparency and disclosures and avoidance of a conflict of interest.

CRAs would also have to cover these details in their half-yearly internal audit, as prescribed by Sebi.