Sebi issues stricter disclosure regime for credit rating agencies

Promoter group support, linkages to subsidiaries to be stated upfront; Move seen as a fallout of IL&FS crisis

The Securities and Exchange Board of India (Sebi) on Tuesday issued stricter disclosure guidelines for credit rating agencies (CRAs). Under the new framework, CRAs will have to make nuanced disclosures on factors such as promoter support, linkages with subsidiaries and liquidity position for meeting near-term payment obligations.

The latest move by Sebi is seen as a fallout of Infrastructure Leasing & Financial Services (IL&FS) crisis, which brought to light the shortcomings in the credit rating process.

CRAs monitor and analyse the relevant factors that affect the creditworthiness of a borrower and issue a rating, to help price the bond instruments.