Sebi modifies credit rating agency rules

Capital markets regulator Sebi has revised timelines for credit rating agencies (CRAs) to enhance the ease of doing business by introducing the term "working days" instead of "days" for compliance deadlines. In a circular issued on Tuesday, the markets watchdog announced changes in rules for CRAs aimed at standardising rating processes and publication protocols.

These changes follow recommendations from a working group on CRAs that highlighted the challenges posed by existing timelines, especially during non-working days.

"One of the recommendations of the Working Group of CRAs for ease of doing business pertains to modification of approach on specifying timelines from 'days' to 'working days' in respect of certain requirements," Sebi said.

Under the revised rules, the regulator said credit rating agencies are required to publish press releases on rating actions within seven working days of the relevant event, replacing the previous mandate of seven calendar days.

Similarly, for reviewing ratings in cases of delays in debt servicing, the timeline has been adjusted to two working days from two calendar days, the Securities and Exchange Board of India (Sebi) said.

In addition, Sebi has revised the timeframe for tagging ratings as "Issuer Not Cooperating" due to three consecutive months of non-submission of a no-default statement (NDS). Credit rating agencies must now take this action within five working days against seven calendar days earlier.

The changes also affect confirmation protocols for debt servicing by issuers. If the confirmation is not received within a working day after the due date, then CRAs are required to follow up promptly and issue a press release within a tighter two-working-day timeframe.

The regulator also said that these modifications will take effect immediately and are designed to streamline operational practices for credit rating agencies.