Page 243 - DMGT512_FINANCIAL_INSTITUTIONS_AND_SERVICES

Financial Institutions and Services

Notes Introduction

According to SEBI, "rating" means an opinion regarding securities, expressed in the form of
standard symbols or in any other standardised manner, assigned by a credit rating agency and
used by the issuer of such securities, to comply with a requirement specified by these regulations.
A credit rating estimates the credit worthiness of an individual, corporation, or even a country.
It is an evaluation made by credit bureaus of a borrower's overall credit history.

17.1 Regulatory Framework

The regulatory framework for the credit rating agencies is determined under Securities and
Exchange Board of India (Credit Rating Agencies) Regulations, 1999. The following are the main
highlights:

17.1.1 Conditions of Certificate and Validity Period

1. The certificate granted to certify a company as a credit rating agency is, subject to the
following conditions, namely:
(a) the credit rating agency shall comply with the provisions of the Act, the regulations
made under and the guidelines, directives, circulars and instructions issued by the
Board from time to time on the subject of credit rating.
(b) where any information or particulars furnished to the Board by a credit rating
agency:
(i) is found to be false or misleading in any material particular; or
(ii) has undergone change subsequently to its furnishing at the time of the
application for a certificate; the credit rating agency shall forthwith inform
the Board in writing.
2. The period of validity of certificate of registration shall be three years.

17.1.2 Renewal of Certificate

A credit rating agency, if it desires a renewal of the certificate granted to it, has to make to the
Board, an application for the renewal of the certificate of registration. Such application for
renewal of certificate of registration made under sub-regulation has to be accompanied by a non
refundable application fee as specified in the Second Schedule of SEBI.
A renewal application has to be made not less than three months before expiry of the period of
the validity of the certificate.
The application for renewal made under sub-regulation is to be accompanied by a renewal fee
as specified in the second schedule. As far as possible a renewal application is dealt with in the
same manner as if it were an application for the grant of a fresh certificate.

Did u know? What are the conditions where certificate is not granted?
If, after considering an application, the Board is of the opinion that a certificate should not
be granted or renewed, as the case may be, it may, after giving the applicant a reasonable
opportunity of being heard, reject the application.

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