Rating the raters

Reforms package must include strong deterrence

Over the past couple of years, the Securities and Exchange Board of India (Sebi) has been announcing tougher rules around disclosure by credit rating agencies (CRAs) in a bid to boost transparency and accountability. The fresh norms, announced last week, were part of that process and triggered by the crisis in Infrastructure Leasing & Financial Services (IL&FS), which saw its ratings downgraded from investment grade (AAA) to junk (D) status in just 45 days, impacting mutual funds and other investors who had bought bonds of IL&FS and its subsidiaries. The consensus was that the CRAs failed miserably to raise the