Sebi asks rating agencies to explain failure in detecting IL&FS crisis

People in the know say that rating agencies have responded to the regulator, explaining their stance on why they failed to act on time

The Securities and Exchange Board of India (Sebi) has issued notices to credit rating agencies seeking an explanation for their failure to spot the liquidity crisis brewing at the debt-ridden Infrastructure Leasing and Financial Services (IL&FS). 

Icra, Care and India Ratings are among agencies that have been asked to provide reasons for missing out early signs of the crisis at the infrastructure financier. 

These rating agencies have been monitoring the activities of IL&FS, the group’s holding company and its subsidiaries. Moreover, the markets regulator had called a meeting with senior officials of rating agencies last week to discuss measures to