SEBI Introduces Guidelines for Credit Rating Agencies

In an effort to improve the business environment and streamline operations, the Securities and Exchange Board of India (SEBI) has announced new guidelines for credit rating agencies. 

Among these guidelines are the establishment of certain deadlines for addressing company appeals concerning rating actions carried out during routine rating surveillance. August 1st, 2024 is when these modifications will take effect.

“In order to promote ease of doing business and bring about uniformity in dealing with appeals, based on consultation with stakeholders, including CRAs (Credit Rating Agencies), it has been decided to provide specific timelines for dealing with appeals made by the issuer in respect of rating actions carried out pursuant to periodic surveillance of ratings,” SEBI stated in a circular.

According to the new rules, Credit Rating Agencies (CRAs) must notify enterprises of their ratings as soon as possible after the rating committee meeting. Additionally, businesses have three working days to submit an appeal or request a reconsideration of the rating decision.

In addition, within seven working days of the rating committee meeting, CRAs are required to notify the stock exchange or debenture trustee and release a press release on their website. 

SEBI said, “CRAs shall continue to maintain records in respect of the said disclosures for a period of 10 years, which may be shared with debenture trustees upon request. Further, disclosures in respect of the said aspects shall continue to be made available by the CRAs on their website under the issuer-specific press releases/ rating rationale section of the respective issuer, wherever applicable.”

In order to swiftly inform stakeholders about firms that are not collaborating with rating agencies, SEBI has introduced strict deadlines for disclosures, which include daily updates on a list of non-cooperative issuers. Ratings that issuers reject must be kept on file by CRAs for a full year.

As required by CRA standards, SEBI underlined that internal audits of credit rating agencies will be conducted every two years to oversee compliance with these requirements. These steps are intended to protect the interests of investors and advance the securities market’s orderly growth and development.