You are here: Home » Markets » News
Business Standard

IL&FS case: Sebi imposes Rs 25 lakh fine on rating agencies ICRA, CARE

The regulator has given 45 days for the payment of penalty, which was levied under Section 15HB of the Sebi Act.

Ashley Coutinho  |  Mumbai 

Sebi

The Securities and Exchange Board of India (Sebi) has slapped a penalty of ~25 lakh each on credit rating agencies CARE and for violation of the (Credit Rating Agencies) Regulations pertaining to assigning of rating to various non-convertible debentures (NCDs) of IL&FS.

In its order, said the rating agencies had failed to exercise their duty to investors at large and did not downgrade the ratings of of IL&FS in time despite having knowledge of the deteriorating financials of the issuer. The regulator has given 45 days for the payment of penalty, which was levied under Section 15HB of the Act.

IL&FS had defaulted on its obligations in respect of the commercial papers and inter-corporate deposits, due for payment on September 14, 2018, and rated by the two agencies. It also defaulted in interest payments on its on September 17, 21, 26 and 29.

The rating agencies “should have anticipated the mounting credit risks, the stressed balance sheet position of IL&FS and placed the ratings accordingly to alert the market”, the Sebi order observed.

Sebi said while there was no allegation of mala fide on the part of the rating agencies, their failure was serious considering the responsibility bestowed upon them by investors and regulators.

First Published: Fri, December 27 2019. 03:00 IST
RECOMMENDED FOR YOU