The Securities and Exchange Board of India (SEBI) on January 07, 2025, issued a circular regarding the Measures for Ease of Doing Business for Credit Rating Agencies (CRAs).
The Master Circular for CRAs SEBI/HO/DDHS/DDHS-POD3/P/CIR/2024/47 dated May 16, 2024, inter alia, prescribes certain timelines to be followed by CRAs for review of ratings and publication of press releases.
One of the recommendations of the Working Group of CRAs for Ease of Doing Business (“WG”) pertains to the modification of the approach of specifying timelines from “days” to “working days” in respect of certain requirements prescribed in the Master Circular. The WG submitted the process flow involved in complying with the relevant requirements within the extant timelines.
In order to promote Ease of Doing Business and bring about uniformity in dealing with rating reviews and publication of Press Release by CRAs, it has been decided to modify the following paras of the Master Circular as below:
• Clause 9.2.2 has been modified as follows:
CRAs shall publish on their website press release regarding the rating action (including reiteration of existing rating), if warranted, immediately, but not later than 7 working days of occurrence of the said event.
• Clause 9.3.3 has been modified as follows:
In case there have been delays in the payment of interest/principal by the Issuer, the Issuers shall state the same in this statement and the CRA shall promptly conduct a rating review and disseminate the rating action through Press Release within 2 working days of receipt of such statement.
• Clause 11.3 has been modified as follows:
CRAs shall follow a uniform practice of three consecutive months of nonsubmission of No-default Statement (NDS) (or inability to validate timely debt servicing through other sources) as a ground for considering migrating the ratings to INC and shall tag such ratings as INC within a period of 5 working days of three consecutive months of non-submission of NDS. The CRA in its judgement may migrate a rating to the INC category before the expiry of three consecutive months of non-receipt of NDS.
• Clause 28.2.1 has been modified as follows:
In case no confirmation of servicing of debt obligation by the Issuer is received by the CRA from the Debenture Trustee within 1 working day post the due date, the CRA shall immediately follow up with the Issuer for confirmation of payment. In case no response is received from the Issuer within 2 working days of such communication, the CRA shall issue a Press Release as enlisted at para 28.4.3 and disseminate the same on its website and to all stock exchanges where the security is listed.
The circular shall be applicable with immediate effect.
[Circular No. SEBI/HO/DDHS/DDHS-PoD-3/P/CIR/2025/002]
