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Unit 17: Credit Rating

Submission of Report to the Board Notes

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.

17.1.14 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.
Substituted by the SEBI (Procedure for Holding Enquiry by Enquiry Officer and Imposing penalty)
Regulations, 2002.w.e.f. 27-9-2002. Prior to its substitution it read as follows.

Liability for Action in Case of Default

1. A credit rating agency which:
(a) fails to comply with any condition subject to which a certificate has been granted; or
(b) contravenes any of the provisions of the Act or these regulations or any other
regulations made under the Act;
shall be dealt with in the manner provided under the Securities and Exchange Board of
India (Procedure for holding Enquiry by Enquiry officer and Imposing penalty)
Regulations, 2002 and shall be liable to either of the penalties specified as under.

2. The penalties referred to in the above sub-regulation are:
(a) suspension of registration; or
(b) cancellation of registration.

Manner of making Order of Suspension and Cancellation

No order of suspension or of cancellation of the certificate of registration, is passed by the Board,
except after holding an enquiry in accordance with the procedure specified.

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