{"id":202448,"date":"2022-08-29T18:37:00","date_gmt":"2022-08-29T13:07:00","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=202448"},"modified":"2022-08-29T18:37:00","modified_gmt":"2022-08-29T13:07:00","slug":"new-regulations-for-the-credit-rating-agencies-cras-reforming-ratings","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/new-regulations-for-the-credit-rating-agencies-cras-reforming-ratings\/","title":{"rendered":"New regulations for the Credit Rating Agencies (CRAs): Reforming ratings"},"content":{"rendered":"\n<p><strong>Source:<\/strong> The post is based on an article \u201c<strong>Reforming ratings<\/strong>\u201d published in the <strong>Business Standard<\/strong> on <strong>31<sup>st<\/sup> August 2022<\/strong>.<\/p>\n<p><strong>Syllabus: <\/strong>GS 3 &#8211; Changes in industrial policy and their effects on industrial growth.<\/p>\n<p><strong>Relevance<\/strong>: Credit Rating Agencies (CRAs) Regulations<\/p>\n<p><strong>News: Last week, <\/strong>the Securities and Exchange Board of India (Sebi) released a circular modifying the <strong>credit-rating system <\/strong>in ways that would aid in transparency.<\/p>\n<p>The changes would be applicable to already listed debt securities, and also to those proposed to be listed.<\/p>\n<h5><strong>What are these new regulations for the Credit Rating Agencies (CRAs)?<\/strong><\/h5>\n<p>(1) <strong>Criteria for \u201csharp rating actions\u201d<\/strong>: It would refer to a drop of three notches or more in two consecutive rating releases. The CRAs must standardise the methodology for \u201c<strong>sharp rating action<\/strong>\u201d. Further, these changes will be applicable from the first half of the Financial Year 2022-23<\/p>\n<p>(2) CRAs will highlight <strong>non-cooperating issuers, <\/strong>which refers to non-submission of quarterly financial results within prescribed timelines, non-disclosure of current and past operational details about CAPEX plans, debt obligations and repayment details, among others, and any other issue felt appropriate by a CRA.<\/p>\n<p>(3) CRAs should frame detailed policy regarding methodology to assess the non-availability of information from <strong>non-cooperative issuers<\/strong>. CRAs should also consider the steps to be taken under various scenarios of non-cooperation. CRAs should follow a uniform practice of tagging such ratings within 7 days of <strong>3 consecutive months <\/strong>of <strong>non-submission of the no-default statement (NDS).<\/strong> The changes related to not cooperating will come into force by March 31, 2023<\/p>\n<p>(4) CRAs have been empowered to put in place a framework for <strong>rating withdrawal<\/strong> of <strong>perpetual debt securities<\/strong>. If a CRAs withdraws any credit rating, a CRA should mention the reasons for withdrawal and will also have to assign a <strong>final credit rating <\/strong>to such security, in its press release, except where there are no outstanding obligations, or the company is being merged or wound up.<\/p>\n<table style=\"border-collapse: collapse; width: 100%;\">\n<tbody>\n<tr>\n<td style=\"width: 100%;\"><strong>Read more: <a href=\"https:\/\/forumias.com\/blog\/sebi-tightens-disclosure-rules-for-rating-agencies\/\">Sebi tightens disclosure rules for rating agencies<\/a><\/strong><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>All the new measures or regulations of Credit Rating Agencies (CRAs) would aid in transparency and improve borrower compliance with CRAs.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Source: The post is based on an article \u201cReforming ratings\u201d published in the Business Standard on 31st August 2022. Syllabus: GS 3 &#8211; Changes in industrial policy and their effects on industrial growth. Relevance: Credit Rating Agencies (CRAs) Regulations News: Last week, the Securities and Exchange Board of India (Sebi) released a circular modifying the&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/new-regulations-for-the-credit-rating-agencies-cras-reforming-ratings\/\">Continue reading <span class=\"screen-reader-text\">New regulations for the Credit Rating Agencies (CRAs): Reforming ratings<\/span><\/a><\/p>\n","protected":false},"author":10343,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[10503,216],"class_list":["post-202448","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-business-standard","tag-gs-paper-3","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1701589593},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/202448","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10343"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=202448"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/202448\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=202448"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=202448"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=202448"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}