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TMI Blog2015 (3) TMI 159X X X X Extracts X X X X X X X X Extracts X X X X ..... ology and its records, transparency and disclosures avoidance of conflict of interest, code of conduct, etc. The Reserve Bank accredits CRAs for the limited purpose of Bank Loan Ratings to enable banks to use their ratings for capital adequacy purposes under Basel III Capital Adequacy Framework. Also there is an annual review of accreditation of these Credit Rating Agencies by the RBI itself as a measure of check and balance. It is further pointed out that there has to be a play insofar as the exact methodology adopted by any Credit Rating Agency is concerned and that six such agencies were accredited by the RBI. A borrower has the option, in fact, to approach any one or more than one of the agencies for obtaining its credit rating. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the necessity for a policy to regulate the manner in which Credit Rating Agencies assign ratings to customers, which has a direct impact on the ability of the borrowing company to raise loans from banks and financial institutions. 2.We may note at the inception itself that though initially there was a dual prayer made including of declaring Section 10 of the Credit Information Companies (Regulation) Act, 2005 as void, the said relief was not pressed as recorded in our order dated 05.09.2014. 3. It is the submission of the learned senior counsel for the petitioner that the Reserve Bank of India (RBI)/the second respondent seeks to shift the burden for such regulations on Securities and Exchange Board of India (SEBI)/the fourth respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessment Institutions (ECAIs) for assigning risk weights for computation of their credit risk capital for corporate exposures (fund based and non-fund based). The basic approach of Capital Adequacy Framework is that a bank should have sufficient capital to provide a stable resouce to absorb unexpected losses arising from the risks in its business. A higher capital adequacy may lead to a more resilient banking system and a stable financial system. A stable financial system is a pre-requisite for sustained economic development of any country. Moreover, the extent Capital Adequacy Framework is based on the Basel III International standards. The regulations on Capital Adequacy Framework are issued by the Reserve bank under the statutory ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... writ petition and the same is liable to be dismissed in limini. 25. Further, it is submitted that the general superintendence and regulation of credit rating agencies are carried out by SEBI under Securities and Exchange Board of India (Credit Rating Agencies) Regulations, 1999. The regulations issued by SEBI cover various aspects viz., registration of rating agencies, fit and proper criteria for rating agencies, rating process and methodology and its records, transparency and disclosures avoidance of conflict of interest, code of conduct, etc. The Reserve Bank accredits CRAs for the limited purpose of Bank Loan Ratings to enable banks to use their ratings for capital adequacy purposes under Basel III Capital Adequacy Frame ..... X X X X Extracts X X X X X X X X Extracts X X X X
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