Page 246 - DMGT512_FINANCIAL_INSTITUTIONS_AND_SERVICES

Unit 17: Credit Rating

2. the Securities and Exchange Board of India (Prohibition of Fraudulent and Unfair Trade Notes
Practices relating to the Securities Market) Regulations, 1995; and
3. other laws relevant to trading of securities.

17.1.8 Disclosure of Rating Definitions and Rationale

Every credit rating agency -
1. has to make public the definitions of the concerned rating, along with the symbol and,
2. has to also state that the ratings do not constitute recommendations to buy, hold or sell
any securities.
Every credit rating agency has to make available to the general public information relating to
the rationale of the ratings, which shall cover an analysis of the various factors justifying a
favourable assessment, as well as factors constituting a risk.
Where any information is called for by the Board from a credit rating agency for the purposes of
these regulations, including any report relating to its activities, the credit rating agency has to
furnish such information to the Board -
1. within a period specified by the Board or
2. if no such period is specified, then within a reasonable time.

Every credit rating agency has to, at the close of each accounting period, furnish to the Board
copies of its balance sheet and profit and loss account.
All the credit rating agencies have to comply with such guidelines, directives, circulars and
instructions as may be issued by the Board from time to time, on the subject of credit rating.

17.1.9 Appointment of Compliance Officer

Every credit rating agency has to appoint a compliance officer who is responsible for monitoring
the compliance of the Act, rules and regulations, notifications, guidelines, instructions etc issued
by the Board or the Central Government.

The compliance officer immediately and independently reports to the SEBI any non-compliance
observed by him.

17.1.10 Maintenance of Books of Accounts Records etc.

Every credit rating agency has to keep and maintain, for a minimum period of five years, the
following books of accounts, records and documents, namely:

1. copy of its balance sheet, as on the end of each accounting period;
2 a copy of its profit and loss account for each accounting period;
3. a copy of the auditor's report on its accounts for each accounting period;
4. a copy of the agreement entered into, with each client;

5. information supplied by each of the clients;
6. correspondence with each client;
7. ratings assigned to various securities including upgradation and down gradation (if any)
of the ratings so assigned;

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