Sebi steps in to control credit rating agencies' delinquency

The Securities and Exchange Board of India (Sebi), the country's capital markets watchdog, has stepped in to control the rampant mischief indulged in by credit rating agencies' (CRAs) such as private American CRAs Standard & Poor's, Moody's and Fitch.

Sebi has asked CRAs to proactively monitor the financial health, including share price movement, of companies to provide timely and accurate ratings on their debts. The decision follows several instances of CRAs not taking cognisance of delays in servicing debt obligations by the issuers they rate, even though the information has already been discounted by the market.

Besides, the Securities and Exchange Board of India (Sebi) has increased the disclosure requirements. "CRAs are required to track the servicing of debt obligations for each instrument rated by them, ISIN wise, and look for potential deterioration in financial which might lead to defaults/delays, particularly before/around the due date(s) for servicing of debt obligations," Sebi said.

They would have to monitor the exchange's website for disclosures made by the issuer.