SEBI Introduces New Guidelines To Enhance Efficiency Of Credit Rating Agencies

SEBI has introduced precise timelines for disclosures, including daily updates on a list of non-cooperative issuers to notify stakeholders about entities not cooperating with rating agencies promptly

The Securities and Exchange Board of India (SEBI) has released new guidelines aimed at streamlining operations and improving the business environment for credit rating agencies. According to the circular issued on Thursday, these guidelines include the introduction of specific timelines for handling appeals from companies regarding rating actions conducted during regular surveillance of ratings. These changes will come into effect on August 1, 2024.

"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," the circular reads.

The new regulations require Credit Rating Agencies (CRAs) to promptly communicate ratings to companies within one working day following the rating committee meeting. There is also a strict deadline for companies to request a review or appeal of the rating decision within three working days. 

Additionally, CRAs must release a press release on their website and inform the stock exchange or debenture trustee within seven working days of the rating committee meeting.

"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," SEBI said.

SEBI has introduced precise timelines for disclosures, including daily updates on a list of non-cooperative issuers to notify stakeholders about entities not cooperating with rating agencies promptly. CRAs must retain information on ratings not accepted by issuers for a period of 12 months. 

SEBI emphasised that compliance with these guidelines will be monitored through biannual internal audits of credit rating agencies, as mandated under CRA norms. These measures aim to safeguard investor interests and promote the orderly development and regulation of the securities market.