CARE Ratings pays Rs 13.05 lakh to settle allegations of violations of CRA Regulations

One of the allegations was violation of a directive on material events that require a review

CARE Ratings has settled allegations of violations of Sebi directions and the Code of Conduct issued for credit rating agencies (CRAs) by paying Rs 13.05 lakh.

In a settlement order dated August 23, the Securities and Exchange Board of India (Sebi) stated that the CRA proposed to settle the proceedings against it without admitting or denying the findings of facts and conclusions of law.

The CRA filed its settlement application on March 5, 2024.

The regulator had started adjudication proceedings against the CRA for alleged violation of Clause 1(B) of a SEBI Circular dated June 30, 2017, on Monitoring and Review of Ratings by Credit Rating Agencies and Clause 8 of Third Schedule - Code of Conduct read with Regulation 13 of SEBI (Credit Rating Agencies) Regulations, 1999.

Clause 1(B) of the circular has to do with material events that require a review. It requires the CRAs to carry out a review of the ratings upon the occurrence of or announcement/ news of material events including, but not restricted to, a given list.

Clause 8 of Third Schedule - Code of Conduct states: A credit rating agency shall keep track of all important changes relating to the client companies and shall develop efficient and responsive systems to yield timely and accurate ratings. Further a credit rating agency shall also monitor closely all relevant factors that might affect the creditworthiness of the issuers.