SEBI To Permit Credit Rating Of Instruments Outside Its Purview

SEBI To Permit Credit Rating Of Instruments Outside Its Purview

States that agencies which expand ratings, will need to set up a new unit within six months

The Securities and Exchange Board of India (SEBI) has proposed allowing credit ratings agencies to rate financial instruments regulated by other financial sector regulators.

In its consultation paper, the regulator stated that any agency that expands ratings to such instruments will need to set up a new unit within six months.

Under the new chairman Tuhin Kanta Pandey, SEBI signalled a more pragmatic approach to oversight and also relaxed certain regulations. It added that agencies that rate non-SEBI-regulated instruments must charge a fee for the same and maintain arm's length from the business that rates SEBI-regulated entities.

The market watchdog said, "SEBI has been receiving feedback from the industry for permitting credit ratings agencies to undertake rating of financial instruments under the purview of other regulators, including unlisted securities.”