SEBI eases timelines for credit-rating agencies, changes "days" to "working days"

The measure has been announced taking into account CRAs' dependence on external entities such as banks and debenture trustees.

The market regulator has eased the timelines set for credit-rating agencies (CRAs) by modifying them to "working days" from the current "days".

In a circular issued on January 8, the Securities and Exchange Board of India (SEBI) announced this ease of doing business measure after consulting with the Working Group for CRAs.

The circular said, "The WG (Working Group) submitted the process flow involved in complying with the relevant requirements within the extant timelines. Further, CRAs depend on external entities such as bankers and debenture trustees, particularly in order to conclusively establish and substantiate delays and defaults in debt servicing, where it is difficult to obtain written confirmation on holidays/ non-working weekends."

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Therefore the timelines have been revised as follows:

1. Current timeline: Clause 9.2.2:CRAs shall publish on their website press release regarding the rating action (including reiteration of existing rating), if warranted, immediately, but not later than 7 days of occurrence of the said event.

Revised timeline: 7 working days

2. Current: Clause 9.3.3:In case there have been delays in the payment of interest/ principal by the Issuer, the Issuers shall state the same in this statement and the CRA shall promptly conduct a rating review and disseminate the rating action through Press Release within 2 days of receipt of such statement.

Revised: 2 working days

3. Current: Clause 11.3:CRAs shall follow a uniform practice of three consecutive months of non-submission of No default Statement (NDS) (or inability to validate timely debt servicing through other sources) as a ground for considering migrating the ratings to INC and shall tag such ratings as INC within a period of 7 days of three consecutive months of non-submission of NDS. The CRA in its judgement may migrate a rating to the INC category before the expiry of three consecutive months of non-receipt of NDS.

Revised: 5 working days.

4. Current: Clause 28.2.1:In case no confirmation of servicing of debt obligation by the Issuer is received by the CRA from the Debenture Trustee within 1 day post the due date, the CRA shall immediately follow up with the Issuer for confirmation of payment. In case no response is received from the Issuer within 2 days of such communication, the CRA shall issue a Press Release as enlisted at para 28.4.3 and disseminate the same on its website and to all stock exchanges where the security is listed.

Revised: 1 working day and 2 working days, respectively.