IL&FS Scam Side Effect: CARE Becomes The Second Credit Rating Agency After ICRA To Send Its Top Boss On 'Leave'

The board of directors of the credit ratings company CARE has sent Rajesh Mokashi, its Managing Director & CEO, “on leave with immediate effect until further notice”, it has been officially announced.

Incidentally, CARE is now the second rating agency head after ICRA which has sent its head “on leave” after an anonymous complaint to Securities & Exchange Board of India (SEBI) alleged that there were lapses in the rating mechanism.

It may be recalled that several rating agencies had given high ratings to IL&FS which defaulted.

Meanwhile, CARE’s board of directors has appointed T N Arun Kumar, who is presently Executive Director (Ratings), as the Interim Chief Executive Officer of the company, it has also been announced.

However, Kumar won’t be part of the rating operations in order to ensure the independence of the ratings process, according to a recent late night filing made to the stock exchange.

After the IL&FS Group fraud hit the markets, Indian credit rating companies have been facing criticism for missing early warning signs.

The surprise default of IL&FS last year led to a crippling liquidity crisis and soured the sentiment for the entire financial sector due to which the incident has prompted capital market regulator SEBI to tighten rules for rating firms to restore investor faith in the system.