2015 (3) TMI 159

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....nd steel commodities and by the present petition, seeks to raise the issue of 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 s....

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....dised Approach (SA) for capital computation under Basel III Capital Adequacy Framework.  Under this approach, banks use ratings assigned by accredited External Credit 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.  Moreo....

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....seek external ratings.  Banks may at their discretion require borrowers to obtain external credit ratings to complement their own internal credit risk assessment.  In view of what is stated above, there is no substance in the above 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 me....