TaxTMI 
TaxTMI 
Guidelines for Credit Rating Agencies
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....es in these factors, 1.2 Summary of discussions with the issuer, its management, auditors and bankers which have a bearing on the credit rating, 1.3 Decisions of the rating committee(s), including voting details and notes of dissent, if any, by any member of the rating committee, and 1.4 If a quantitative model is a substantial component of the credit rating process, the rationale for any material difference between the credit rating implied by the model and the credit rating actually assigned. 1.5 These records should be maintained till five years after maturity of instruments and be made available to auditors and regulatory bodies when sought by them. 2. Default Studies Default studies are central to evaluating the performance of a credit rating agency and whether its ratings can predict default over a period of time. In order to promote transparency and to enable the market to best judge the performance of the ratings, the CRA, should publish information about the historical default rates of CRA rating categories and whether the default rates of these categories have changed over time, so that the public can understand the historical per....
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....ucts, namely, instruments / pay-outs resulting from securitization transactions. In such cases, apart from following all the applicable requirements in case of non-structured ratings, the following additional requirements shall also be complied with: a. A CRA or its subsidiaries shall not provide consultancy or advisory services regarding the design of the structured finance instrument. b. The rating symbols shall clearly indicate that the ratings are for structured finance products. 5. Unsolicited Credit Ratings 5.1 In case of unsolicited credit ratings, i.e. the credit ratings not arising out of the agreement between a CRA and the issuer, credit rating symbol shall be accompanied by the word "UNSOLICITED" in the same font size. 5.2 A CRA shall monitor and disclose credit rating during the life of the rated securities, as if it were a solicited rating. 6. Disclosures A CRA shall make all the disclosures stipulated below on their websites. In case of listed securities, the CRA shall also make disclosures to the stock exchanges as specified in the SEBI (Credit Ratings) Re....
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....-rating services, 6.3.3.2 issuer wise percentage share of non-rating income of the CRA and its subsidiary to the total revenue of the CRA and its subsidiary from that issuer, and 6.3.3.3 names of the rated issuers who along with their associates contribute 10% or more of total revenue of the CRA and its subsidiaries. 6.4 Structured Finance Products 6.4.1 While publishing the ratings of structured finance products and their movements, a CRA apart from following all the applicable requirements in case of non-structured ratings shall also disclose the track record of the originator and details of nature of underlying assets while assigning the credit rating. The track record shall include a brief description of the financials of the originator, rating migrations to speculative categories and defaults. 6.4.2 A CRA shall also disclose at least once in every six months, the performance of the rated pool, i.e., collection efficiency, delinquencies. A CRA shall also provide a detailed description of the underlying pools including ageing, Credit enhancements such as liquidity supports, first and second loss guarantee provided shall also be disclosed. 6.5 ....
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.... to protect the interest of investors in securities and to promote the development of, and to regulate, the securities market. Yours faithfully, Prasanta Mahapatra Deputy General Manager Tel. No: 022-26449313 Email id : [email protected] Encl: as above   ANNEXURE I Details of new credit ratings assigned during last six-months New Ratings assigned between Apr-Sep / Oct - Mar Sl. No. Name of the Issuer Instrument Issue size (Rs. Millions) Rating 1 2 3 4 5 6 ANNEXURE II Movement* of each credit rating Rating Movements between Apr-Sep / Oct - Mar Sl. No. Name of the Issuer Rating prior to Revision Rating Post Revision 1 2 3 4 * will cover only ra....
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.... equivalent 1 2 3 AA or equivalent 1 2 3 1 A or equivalent 1 2 3 BBB or equivalent 1 2 3 ....