Market regulator Securities and Exchange Board of India (SEBI) has issued tougher norms for India’s ratings agencies and has directed the agencies to monitor whether issuers are meeting their debt obligations and increasing disclosure requirements.
The three global credit rating agencies – Standard & Poor’s, Fitch Ratings, and Moody’s Investors Service – have majority stakes in Indian firms which have different rating standards and operate independently from their parent companies.
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In recent months, SEBI has felt that the credit rating agencies were slow to react to changing conditions in several companies that defaulted and adjust their rating accordingly. The new norms from SEBI will require credit rating agencies to actively monitor whether debt issuers were meeting payments for each rated instrument and be vigilant to any deterioration in financial conditions.