SEBI Introduces New Guidelines for Credit Rating agencies

The Securities and Exchange Board of India (SEBI), the capital market regulator, has announced new guidelines to streamline operations and enhance the ease of doing business for credit rating agencies. The new rules introduce specific timelines for handling appeals made by companies regarding rating actions during periodic surveillance.

Effective August 1, 2024, changes aim to promote ease of business and ensure uniformity in handling appeals based on consultations with stakeholders, including credit rating agencies (CRAs). According to SEBI’s circular, CRAs must communicate ratings to companies within one working day of the rating committee meeting, with an outer limit to ensure promptness.

Companies will have three working days to request a review or appeal of the rating decision. The CRA must publish a press release on their website and notify the stock exchange or debenture trustee within seven working days of the rating committee meeting.

CRAs are required to maintain records of these disclosures for ten years, which can be shared with debenture trustees upon request. Additionally, these disclosures must be made available on the CRA’s website under the issuer-specific press releases or rating rationale section.

SEBI has also set specific timelines for certain disclosures, such as updating the list of non-cooperative issuers daily to ensure stakeholders are informed promptly. For ratings not accepted by issuers, CRAs must retain this information for 12 months.

SEBI will monitor the process through half-yearly internal audits for credit rating agencies, as required under CRA norms. It aims to protect investors and foster the development and regulation of the securities market.