Ease of Doing Business: Sebi specifies timelines for credit-rating agencies' periodic-surveillance actions

The new guidelines also specified the periodicity with which disclosures must be maintained on the CRA website

For ease of doing business for credit-rating agencies (CRAs), the market regulator has issued specific timelines for period-surveillance actions.

Until now, specific timelines for various scenarios had been given only for the initial-rating reporting. In the circular dated July 4, the Securities and Exchange Board of India (Sebi) has given timelines on dealing with appeals filed by the issuers following CRAs' periodic surveillance of ratings.

As the circular stated, this has been done to bring about uniformity in dealing with appeals and has been done in consultation with various stakeholders including the CRAs. The provisions given in it will come into effect from August 1, 2024.

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Under the new guidelines, the following have to be followed:

1. Communication of the rating to the issuer to be done within one working day of the Rating Committee's meeting.

2. If there is a request for review or if there is an appeal of rating by the issuer, then this has to be completed within three working days of the Rating Committee meeting.

3. Dissemination of the press release on CRA's website and intimation of the same to the stock exchange/debenture trustee has to be done within seven working days of the Rating Committee meeting.

The earlier guideline merely said that the dissemination of the press release should be done within five days of the committee's meeting, with no timelines given for when an issuer appeals the ratings.

The new guidelines also specified the periodicity with which disclosures must be maintained on the CRA website.

The earlier guidelines said, “An archive of all disclosures should be maintained by CRAs on their website, for at least 10 years. This also includes ratings press releases by CRAs”.

To this have been added the periodicity required in making different disclosures, as given below:

1. Disclosure of list of non-cooperative issuers – Daily

2. Disclosures in case of rating not accepted by an issuer – 12 months

3. Disclosure in case of delay in periodic review – 12 months

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The circular added, "CRAs shall continue to maintain records in respect of the said disclosures for a period of 10 years, which may be shared with Debenture Trustees upon request. Further, disclosures in respect of the said aspects shall continue to be made available by the CRAs on their website under the issuer-specific Press Releases/ Rating Rationale section of the respective issuer, wherever applicable."