Page 260 - DMGT512_FINANCIAL_INSTITUTIONS_AND_SERVICES

Unit 17: Credit Rating

3. Credit rating agencies are registered and regulated by the ............................... Notes
4. The Board may appoint one or more persons as inspecting officers, to undertake inspection
of the books of account, ........................... and ........................ of the credit rating agencies.

5. The order of suspension or cancellation of certificate of registration is published by the
Board in at least ........................ daily newspapers.
6. The period of validity of certificate of registration shall be ........................ years.

7. A renewal application has to be made not less than ........................ months before expiry of
the period of the validity of the certificate.
8. If, after considering an application, ........................ 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, ........................ the application.
9. Every credit rating agency has to abide by the ........................ contained in the Third Schedule.

10. An applicant whose application for the grant of a certificate has been ........................, shall
not undertake any rating activity.
11. The application for renewal made under sub-regulation is to be accompanied by a
........................ fee as specified in the second schedule.
12. The Board may, in order to ........................ the interests of investors, issue directions with
regard to the transfer of records.

13. Every credit rating agency has to, during the lifetime of securities rated by it continuously
........................ the rating of such securities.
14. Provided that if owing to ........................, a rating has been based on the best available
information, the credit rating agency shall disclose to the investors the fact that the rating
is so based.
15. Every credit rating agency has to frame appropriate ........................ and systems for
monitoring the trading of securities by its employees in the securities of its clients.

17.7 Review Questions

1. What do you think is the advantage for an economy to have multiple credit rating agencies?
2. What are the limitations of multiple credit rating agencies?

3. Do you think that SEBI itself is unable to handle the rating issue of the credit companies
and that is why it registers credit rating agencies under it?
4. Evaluate the working of:

(a) CRISIL
(b) CARE
(c) DCR India

(d) ONICRA
as credit rating agencies in India.
5. Critically evaluate the contribution of credit rating system in Indian economy.
6. What are the suggestions that you would give to various credit rating agencies operating
in India for further improvement and why?

LOVELY PROFESSIONAL UNIVERSITY 255