9911796707
TMI BlogMonitoring and Review of Ratings by Credit Rating Agencies (CRAs)X X X X Extracts X X X X X X X X Extracts X X X X ..... ly track all important changes relating to the client companies in order to yield timely and accurate ratings. It is reiterated that CRAs are required to ensure prompt and accurate rating action. Accordingly, the following clarifications in respect of monitoring mechanism, disclosure norms and timelines are being brought to the attention of CRAs for compliance: 1. Surveillance Mechanism for identifying potential defaults: As per Regulation 15 of SEBI (Credit Rating Agencies) Regulations, 1999, CRAs are required to continuously monitor the rating of securities and disseminate information regarding newly assigned ratings, and changes in earlier rating promptly through press releases on websites of CRAs as well as all the stock exchang ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Issuer within 2 days of such communication, the CRA shall issue a Press Release as enlisted at point 3B (III) below and disseminate the same on its website and to all stock exchanges where the security is listed. IV. The CRA shall also make a reference to SEBI regarding such suppression of information by the issuer/ non-cooperation of Issuer with CRA. Failure to make such reference shall be considered as aiding and abetting the Issuer in suppression of material information by the CRA which would be in contravention of Clause 12 of Code of Conduct of CRAs and may result in violation of the provisions of section 12A of the Securities and Exchange Board of India Act, 1992 and SEBI (Prohibition of Fraudulent and Unfair Trade Practices relati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the Issuer on a monthly basis: I. In order to enable timely recognition of default by the CRA, the CRA shall seek a No Default Statement (NDS) from the Issuer at the end of each month, which shall be provided to the CRA by the Issuer on the first working day of the next month. II. The NDS shall require the Issuer to explicitly confirm to the CRA that it has not delayed on any payment of interest/ principal in the previous month. III. In case there have been delays, the Issuers shall state the same in this statement and the CRA shall promptly conduct a rating review and disseminate the rating action through Press Release within 2 days of receipt of such statement. IV. A standardized format of the NDS is provided at Annexur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew: Scenario Timeline- immediately but not later than Intimation from Issuer/ Debenture Trustee/ Bankers of the Issuer regarding delay in servicing debt obligation 2 working days of intimation Material Events requiring review (as stated in point 1B) 7 working days of occurrence of the event. 3. Disclosure Norms: A. Press Release: I. In line with requirements of Circular MIRSD4/ CIR/ P/ 2016/ 119 dated November 01, 2016 on standardization of press release, it is reiterated that press releases for rating actions by CRAs shall include key financial indicators and ratios for the Issuer for the last and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstances, CRAs have provided indicative ratings to Issuers without entering into a written agreement with such Issuers and have thereafter not disclosed such ratings on their websites. III. CRAs are advised to refrain from giving Indicative Ratings without having a written agreement in place. In case such Indicative Ratings are provided by the CRA, it shall be considered as aiding and abetting the Issuer in suppression of material information by the CRA which would be in contravention of Clause 12 of Code of Conduct of CRAs and may result in violation of the provisions of section 12A of the Securities and Exchange Board of India Act, 1992 and SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... top 10 investors c. The client (Issuer/ borrower) undertakes to provide the CRA a No Default Statement on a monthly basis wherein the Issuer shall explicitly confirm that it has not delayed on any payment of interest/ principal in the previous month. Such statement shall be provided to the CRA on the first working day of the next month. 5. Internal Audit of CRAs: As required under Regulation 22 of the SEBI (Credit Rating Agencies) Regulations, 1999 and provisions of Circular SEBI/ MIRSD/CRA/Cir-01/ 2010 dated January 06, 2010 and Circular MIRSD4/ CIR/ P/ 2016/ 119 dated November 01, 2016, compliance by CRA with the provisions clarified vide this Circular shall be verified during the half-yearly Internal Audit. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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