India’s markets regulator, the Securities and Exchange Board of India (Sebi), has imposed a penalty of Rs 3 lakh on India Ratings and Research over identified lapses. This action follows a joint inspection conducted by Sebi and the Reserve Bank of India (RBI) from August 22 to 29, 2022, covering the period from August 1, 2021, to June 30, 2022.
Sebi’s order outlines that the inspection revealed instances where the entity failed to comply with the regulator’s circular requirements. The fine of Rs 3 lakh has been levied, taking into account various mitigating factors.
One notable finding was that the rating agency was not promptly informed about delays or defaults in the payment of Non-Convertible Debentures (NCDs) by issuers and debenture trustees. Sebi considered mitigating factors, including the fact that the investors affected were institutional investors who were adequately briefed about the associated risks in NCDs.
Sebi pointed out a delay in the rating agency’s recognition of a default by Altico Capital India. Additionally, there was a delayed acknowledgment of a material event concerning Hindustan Cleanenergy Ltd.
The penalty underscores Sebi’s commitment to upholding regulatory compliance in the financial sector. It serves as a reminder to rating agencies to adhere to circular requirements promptly and maintain transparency in communicating significant financial events. The regulatory action aims to reinforce the integrity and reliability of the financial rating system within the country.
