Dec 30, 2019

Amendment to SEBI Credit Rating Agencies Regulations

On September 23, 2019, the Securities and Exchange Board of India (‘SEBI’) notified amendments to the SEBI (Credit Rating Agencies) Regulations, 1999 (‘CRA Regulations’). Previously, clients were required to “agree to” (i) periodic review of the rating by the credit rating agency (‘CRA’) during the tenure of the rated instrument, (ii) cooperate with the CRA to enable it to maintain a true and accurate rating, (iii) disclose prescribed information in the offer document, and (iv) obtain rating for issue of debt securities per the relevant regulations. Post the amendment, clients have to compulsorily undertake the above and provide explicit consent to the CRA for obtaining details related to their (i) existing and/or future borrowings of any nature, (ii) repayments and delays/ defaults, if any, of any nature in servicing of the borrowing either from the lender or any other statutory / non-statutory organization maintaining any such information, to enable the CRA to have timely information and consider impact of such information on ratings assigned by it. By way of a circular dated November 4, 2019, SEBI has imposed additional governance norms for CRAs.

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