CARE Ratings has taken the initiative to incorporate an “Association of Indian Rating Agencies” to build trust among all stakeholders.
The association was formed because the lack of a representative body in the industry proved to be detrimental to building trust among all stakeholders.
As a result, the association was incorporated as a non-profit organization (NPO) by a few rating agencies, CARE Ratings said in a regulatory filing.
“The past two years have been difficult and turbulent for the CRA industry. The industry has taken several steps with regulators to improve rating standards, standards and disclosure processes, ”the CRA said.
While credit rating agencies are supposed to give forward-looking opinions on a borrower’s ability and willingness to pay dues in full and on time, they have been criticized for their inability to do so in cases such as IL&FS and DHFL.
The association’s objectives include interacting with the Securities and Exchange Board of India (SEBI) and representing the market regulator on all matters relating to the rating industry.
He will represent to the Indian government and its ministries and departments, the Reserve Bank of India (RBI) and other bodies on all matters relating to the rating industry.
In addition, the association intends to disseminate information on the rating industry and to undertake studies and research directly and / or in association with other bodies; and develop and maintain cooperative efforts that promote the interaction and exchange of ideas, information, knowledge and skills among credit rating agencies in India, which would enhance their capacities and role of providing reliable market information
In addition, the NPO will undertake activities aimed at promoting the adoption of best practices and common standards ensuring high quality and comparability of credit ratings between agencies, in accordance with the highest ethical and financial standards. professional conduct.
The association was launched with an authorized share capital of Rs 5 lakh and a paid-up capital of Rs 1.05 lakh.
CARE Ratings CEO and CEO Ajay Mahajan is the association’s first president. The chairmanship will be rotated among the members of the NPO entity.
The agency announced its intention to acquire 5,250 shares, or 50 percent of the initial shareholding of the NPO entity. The ratio of number of shares and / or percentage will decrease once other rating agencies become members of the NPO entity, CARE said.
Currently, seven rating agencies are registered with SEBI: CRISIL Ratings, ICRA, CARE Ratings, India Ratings and Research, Brickwork Ratings, Acuite Ratings and Research, and Infomerics Valuation and Rating.