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Notes 3. to investigate into complaints received from investors, clients or any other person on any
matter having a bearing on activities of the credit rating agency;
4. in the interest of the securities market or in the interest of investors.
The inspections ordered by the Board do not ordinarily go into an examination of the
appropriateness of the assigned ratings on the merits. Inspections to judge the appropriateness
of the ratings may be ordered by the Board, only in case of complaints which are serious in
nature. Inspections are carried out either by the officers of the Board or independent experts,
with relevant experience or combination of both.
Notice before Inspection or Investigation
Before ordering an inspection or investigation, the Board gives no less than ten days written
notice to the credit rating agency for that purpose. Nevertheless, where the Board is satisfied
that in the interest of the investors, no such notice is given, it, by an order in writing, directs that
the inspection or investigation of the affairs of the credit rating agency be taken up without such
notice.
During the course of an inspection or investigation, the credit rating agency against whom the
inspection or is being carried out is bound to discharge all its obligations.
Task Find out what are the obligations of credit rating agency on inspection or
investigation by the Board and list them.
Submission of Report to the Board
The inspecting officer, as soon as possible, on completion of the inspection or investigation,
submits a report to the Board. If directed to do so by the Board, he may submit an interim report.
Action on Inspection or Investigation Report
The Board or the Chairman, after consideration of inspection or investigation report take such
action as the Board or Chairman deems fit and appropriate including action under the Securities
and Exchange Board of India (Procedure for Holding Enquiry by Enquiry Officer and Imposing
Penalty) Regulations, 2002.
10.1.14 Procedure for Action in Case of Default
Liability for action in case of default Substituted by SEBI (Procedure For Holding Enquiry by
Enquiry officer and Imposing Penalty) Regulation, 2002, w.e.f. 27-9-2002. Prior to its substitution
it read as follows:
Communication of Findings etc. to the Credit Rating Agency
The Board shall, after consideration of the inspection report or the interim report referred to in
regulation 32, communicate the findings of the inspecting officer to the credit rating agency and
give it a reasonable opportunity of being heard in the matter.
On receipt of the explanation, if any, from the credit rating agency, the Board may call upon the
credit rating agency to take such measures as the Board may deem fit in the interest of the
securities market and for due compliance with the provisions of the Act and these regulations.
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