TaxTMI 
TaxTMI 
Enhanced Standards for Credit Rating Agencies (CRAs)
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....actions. IV. Functioning and evaluation of Rating Committees/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 ....
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....sy and ready access of the same by investors. IV. Press Release, related to rating action, shall provide a reference/ hyperlink tothe specific criteriaapplied for the rating. B. Rating 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 arrangement....
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....ning and Evaluation of Rating Committees/Sub-Committees A. Each CRA shall define theobligations, responsibilities, areas of conflict of interest, etc. of rating committee members in its Operations Manual/ Internal governing document.The following shallbe specifically set out in the Operations Manual/ Internal governing documentof each CRA and disclosed on itswebsite 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 Ra....
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....se II. Details of Instrument III. Rating Action and Indicative/updated rating based on best available information IV. A brief write-up on the non-co-operation by the Issuer/ Borrower and the consistent follow-up done by the CRA for getting the information. V. Hyperlink/ reference to the applicable "Criteria" VI. Limitations regarding information availability (shallhave a suitable caveat cautioning the investors/lenders /public) VII. Rating 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 s....
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....ions to the checklist shall be documented by the auditor as part of the audit report submitted to the board. VI. Review of ratings has been carried out as per the review policy of the CRA. VII. Dissents, if any, have been recorded for each committee meeting, as stated in the Operations Manual/ Internal governing document. VIII. CRA has complied with the timelines for publication of press release/ rating rationale for the ratings assigned, as set out in its Operations Manual/ Internal governing document. IX. The PressReleases issued are broadly in line with the standard template as placed at Annexure-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/ recommendat....
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....p; Short Term Continuously overdrawn for more than 30 days. Non fund-based facilities Letter of credit (LC) Short Term Overdue for more than 30 days from the day of devolvement. Bank Guarantee (BG)(Performance/ Financial) Short Term Amount remaining unpaid from 30 days from invocation of the facility. Other Scenarios When rated instrument is rescheduled: Non-servicing of the debt (principal as well as interest) as per the existing repayment terms in anticipation of a favourable response from the banks of accepting their restructuring application/ proposal shallbe considered as a default. Rescheduling of the debt instrument by the lenders prior to the due date of payment will not be treated as default, unless the same is done to avoid default or bankruptcy. Curing Period 90 Days - for Default to Speculative Grade and generally 365 Days for Default to Investment Grade *For bank loan ratings, default recognition will need to be in line with the RBI guidance Annexure-A2: Standard Template for Press Release (Minim....