TaxTMI 
TaxTMI 
Enhanced Standards for Credit Rating Agencies (CRAs)
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....es/Sub-Committees. V. Disclosure of ratings in case of non-acceptance by an issuer VI. Disclosure in case of delay in periodic review of ratings. VII. Policy in respectofnon-co-operation by the issuer. VIII. Strengthening and enhancing the relevance of Internal Audit of CRAs, viz.appointmentand rotation of auditors and scope of the audit. 3. The CRAs shall effectively implement these guidelines within 60 days from the date of issue of this circular. 4. The CRAs shall at all times observe high standards and fairness in conduct of the business and any act of omission or commission in contravention of the provisions of clauses 12 and/or 23 of Code of Conduct , as specified under Third Schedule of the SEBI (Credit Rating Agencies) Regulations, 1999, in letter or spirit, 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) Regulations, 2003. 5. This circular is issued in exercise of the powers conferred by Section 11 (1) of Securitiesand Exchange Board of India Act, 1992 read with the provisions of Regulation 20of SEBI (Credit Ra....
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....ating Process and Policies I. CRAsare mandated to have in place a proper rating process and disclosethe same on their website. II. The following shall also be specified in the Operations Manual/ Internal governing document of CRAs: a. Basic Minimum information required for conducting the Rating Exercise b. External entities (bankers, auditors etc.) that need to be contacted c. Mode of seeking information from external entities. CRAs should endeavor to obtain such information/confirmation in writing. d. Policy regarding internal approvals and timelines at each step of the Rating Exercise e. Policy regarding monitoring and reviewof ratings, including the timelines within which such review is to be completed III. Each CRA shall frame detailed guidelines on the following, include them in its Operations Manual/ Internal governing document and disclose the sameon its website: a. General nature of compensation arrangements with rated entities Policy for appeal by Issuers against the Rating being assigned to its instruments b. Policy for placing ratings on credit watch c. Guidelines on what constitutes non-cooperation. d. Gift policy e. Confidentiality policy f....
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....e I. Eligibility for becoming committee/sub-committee members II. Composition of committee/sub-committee III. Minimum quorum required IV. Duties of committee members V. System of voting and recording of dissent. VI. Managing conflict of interest in the rating committee/sub-committee. B. Persons who have business responsibility shall not be part of the Rating Committee. However, the MD/ CEO may be a member of the Rating Committee if the majority of the Rating Committee members areindependent. ("Independent" would mean people not having any pecuniary relationship with the CRA or any of its employees). C. Minutes of each case discussed at the committee shall be maintained and signed (digitally or manually) by the Chairperson. Standard format for the Minutes of Rating Committee Meeting is placed at Annexure-A3. D. The process of discussion of case by circulation must be avoided, unless there is urgency in taking a rating action. E. Chairperson(s) of eachrating committee/sub-committee of the CRA shall, on an annualbasis, undertake a review of the decisions taken by the Committees in that year, which would, inter alia, include: I. Ratings assigned by the rati....
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....ting History for last three years VIII. Name and contact details of the Rating Analyst(s) D. In case an issuer, having not co-operated with a CRA in the past, approaches another CRA for rating, the new CRA shall, in its Press Release, disclose the aspect of non-co-operation. E. The Rating Agreement, signed between the CRA and its client (issuer/ borrower),shall have an additional clause stating that - "The client (issuer/ borrower) agrees to disclose the history and status (non-cooperation, non-payment of fees etc.) of previous rating relation with the earlierCRA(s) to the new CRA along with reasons for non- cooperation,, etc. if applicable." 6. Internal Audit of CRAs: For strengthening and improving the relevance of the internal audit of CRAs, as envisaged under Regulation 22 of the SEBI (Credit Rating Agencies) Regulations, 1999 and Circular SEBI/ MIRSD/CRA/Cir-01/ 2010 dated January 06, 2010, it has been decided to implement the below mentioned additional norms for the Internal Audit: A. Eligibility ofAuditors for conducting the Internal Audit of the CRA I. The audit firm shallhave a minimum experience of three years in the financial sector. II. The inte....
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....A2. X. Verify the rating disclosures made by the CRAs on their website. XI. Comment on the conflict of interest, if any, arising due to composition of the rating committee and participation in the rating committee meetings. D. Action on the Internal Audit Report: I. Upon receipt of the internal audit report, the Compliance Officer of the CRA shall provide detailed comments on each of the observations therein and place the same before the Board of the CRA. II. The final action taken report, including the comments/ recommendations made by Compliance Officer and the Board of the CRAas well as the corrective steps taken by the CRA, shall be submitted to SEBI within 2 months from the date of receipt of the internal audit report or 1 month from the date of Board Meeting of the CRA, whichever is later, in the following format: Sr. No. Observations of the auditor Remarks by the Compliance Officer Comments of the Board of the CRA Corrective actions taken 7. Modification in format of Annexure IV under Clause 6.2.2 of SEBI Circular CIR/MIRSD/CRA/6/2010dated May 3, 2010: The format of Annexure IV under Clause 6.2.2 of SEBI Circular CIR/MIRSD/CRA/6/2010 dated May 3, 2010, pr....
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.... Maturity Date Size of the issue Ratingassigned, along with Rating Outlook Rating action (assigned/upgraded/downgraded) for the instrument. Detailed Rationale justifying the Rating Action/ rating assigned. List of key rating drivers for the Rating Action i.e. factors justifying favourable assessment (strengths) and factors constituting risk (weakness). Detailed description of key rating drivershig hlighted above. Analytical approach (wherever applicable) taken by the CRAto assign the rating. Hyperlink/ reference to the applicable "Criteria" for rating the instrument. About the Company:Factual details of the company along with the major financial information for the last and current financial year. Status of non-cooperation with previous CRA (if applicable): Reason and comments on status of non-co-operation with the previous CRA (if applicable). Any other information: Rating History for last three years: S.No Name of Instrument (NCD/ Bank Loan/ Non- Fund based facilities/ Commercial Paper etc.) Current Rating (Year T) Chronology of Rating History for the past 3 years (Rating Assigned and Press Release Date) along with Outlook/ Watch, if appl....