Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: form 3cd :: ACCOUNTING STANDARDS :: articles on VAT and GST in India :: VAT Audit :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ACCOUNTING STANDARD :: empanelment :: TDS :: VAT RATES :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: TAX RATES - GOODS TAXABLE @ 4% :: due date for vat payment :: cpt :: list of goods taxed at 4% :: Central Excise rule to resale the machines to a new company
 
 
News Headlines »
 Securities excluded from GST ambit in revised Bill
 GST dilemma: Hope fades for new tax regime
 5nance.com launches tax investment platform
 Is government tapping your phone?
 Income tax department to use analytics to look for discrepancies in bank accounts
 GST Council fails to break deadlock over indirect tax regime, next meet on Dec 11 and 12 to hammer out differences
 Invoking Writ Jurisdiction For Income Tax Matters
 How to file income-tax returns online
 How Income Tax Returns Are Scrutinised
 All About New Income Disclosure Scheme to make Demonetisation successful
 Your deposit may draw income tax notice

SEBI moves to regulate credit rating
May, 04th 2010

The Securities and Exchange Board of India (SEBI) has asked creditrating agencies (CRAs) to document the rating process in detail, release default studies from time to time and disclose other relationship with/income from their rating clients.

"The CRAs shall take necessary steps to implement this circular immediately and ensure its full compliance at the latest by June 30, 2010," Sebi said in its notification.

Besides, two mandatory halfyearly disclosures have to be made - one each at the end of March and September of every fiscal.

The new norms address several concerns related to the operations and processes of CRAs that came under attack after the sub- prime crisis in the US. These include the rating process where dissent was not being recorded, conflict of interest of the analysts who were expected to bring in business, seeking advisory and consultancy business from the same client who had been rated by them and charging different clients different amounts for the same work, among others.

Rajesh Mokashi, deputy managing director, Credit Analysis and Research Ltd (CARE), said, "These new guidelines are basically seeking some additional disclosures. They are aimed at increasing the transparency in the operations of CRAs. This will augur well for investors."

Through the new guidelines issued on Monday, Sebi has sought to improve the transparency and enhance the comfort level of investors, in the wake of doubts on the effectiveness of CRAs arising from the financial meltdown over the last two years.

Many experts blamed the CRAs for these two crises, for the assets (sliced and diced) they rated as high failed to perform, which led to the sub- prime and global credit crisis.

Amit Tandon, managing director of Fitch Ratings India, said, "I break up the new norms into two parts. On the structure of agencies, we have no advisory or consultancy businesses. On the information part, we have already been publishing the information Sebi has suggested now. But the formats suggested by Sebi will make it more digestible to the investors. For example, we used to give the summary of upgrades/downgrades earlier. Now, we have to specify them in terms of how many notches they have changed."

Default studies are central to evaluating the performance of a credit rating agency and whether its ratings can predict default over a period of time, Sebi observed and asked CRAs to disclose default rates in two different set formats.

"On an annual basis, the list of defaults separately for each rating category (e. g. AAA, AA, A, BBB, BB, B, C)," said Sebi, specifying a format for the same. Default studies are a quantitative measure of the CRAs' performance, and act as objective report cards of their track records.

CRAs have to make disclosures to the stock exchanges on the rating procedure, rating history and defaults, compensation arrangements with issuers (clients), receipts from rating and non- rating services, conflict of interest, including relationships - commercial or otherwise, structured product ratings and information on unsolicited ratings, among others.

Even for unsolicited ratings, CRAs have to monitor and disclose the ratings as is done in the case of solicited ratings. And the ratings symbols for the former should be accompanied by the word 'unsolicited'. Roopa Kudva, managing director and CEO of Crisil Limited, said, "We view the guidelines issued by Sebi today as furthering these objectives through a uniform level of disclosures across CRAs." Sebi has mandated the CRAs to maintain details on the rating process and other data for at least five years.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Web Application Development Web based Software Solution Web Application Deployment Web Application Solutions Web Application Software Development Web Application Deployment Web Application Programming Web Application Design and Development

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions