Capital Market Regulator SEBI has barred former Managing Director (MD) and Chief Executive Officer (CEO) of Care Ratings, Rajesh Mokashi, for 2 years. As per the SEBI order, Rajesh Mokashi shall not be associated with any SEBI-registered intermediary, directly or indirectly, in any manner whatsoever, for a period of two years. SEBI’s whole-time member, Ashwani Bhatia, passed this order primarily based on findings in the matter of the rating of DHFL.  

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In his order, Ashwani Bhatia said, "I note that despite the fact that the ratings assigned to the above Issuers were called into question and CARE had been put on Notice, the Rating Agency then headed by Noticee 2 (Rajesh Mokashi), failed to take any remedial steps to address the concerns that were raised. In fact, as noted in these proceedings, Noticee 2 was still "directing" the RC (Rating Committee) members to rely on projections given by Issuers, and not take rating action – the very practice which was mainly called into question in the proceedings initiated in the matter of Reliance Communications Ltd. and IL&FS". 

The order also questions the independence of the process adopted in the rating of DHFL.

The order says, "In the matter of DHFL, the Rating Team and Rating Committees were not allowed to act independently and were instead guided by the undeniable pressure exerted by Noticee 2. (Rajesh Mokashi)  

The SEBI order further says that "In the face of such interference by Noticee 2 (Rajesh Mokashi), the measures adopted by CARE to ensure the independence of the rating decisions like independent rating committee, separation of rating and business development, etc., amounted to nothing more than a collective exercise in futility".  

SEBI finds in the examination that, at certain instances, independent criteria were not met and the insulation did not afford sufficient protection to the members of the rating committee while rating DHFL.   

As per the SEBI order, Mokashi was only paying performative obeisance to the regulatory mandate by not being a part of Rating Committees, but was still interfering in rating decisions.  

SEBI's whole-time member, Ashwani Bhatia, further says in the order: "It cannot be without a reason that members of the Rating Committee had repeatedly exchanged WhatsApp messages, lamenting repeated interferences by Noticee 2 during the duration of DHFL ratings for the period from September 2018–February 2019".  

The SEBI order raises issues of conflict of interest because "at the time when conversations around the DHFL downgrade were being discussed at CARE, bills for substantial amounts were pending from their highest-paying client. Such instances could have led to actual or perceived instances of bias if rating decisions are not completely insulated from officials with business development responsibilities."

DHFL went to IBC and was later acquired by Piramal Capital and Housing Finance in September 2021. 

Rajesh Mokashi was the Managing Director and Chief Executive Officer of CARE from August 21, 2016, to July 17, 2019.  

SEBI had received whistleblower complaints from December 2018 onwards, alleging interference in the rating process at CARE and granting AAA ratings to clients paying a higher fee.  

However, SEBI has disposed of proceedings against SB Mainak, the then Non-Executive Chairman of Care Ratings.