Mumbai [India], October 7 (ANI): Market regulator Sebi has issued an order to Brickwork Ratings to wind up its operation within six months because the watchdog said there were major lapses in the rating agency’s duties during its inspections.
In its order, the Securities and Exchange Board of India (Sebi) cited failure on the part of the rating agency to “exercise proper skill, care and diligence, while discharging its duties as a credit rating agency”. It was also mentioned that there were lapses in the case of Bhushan Steel and Gayatri Projects.
Brickwork is one of the seven Sebi-registered credit rating agencies. Brickwork Ratings has Canara Bank, a public sector bank, as its promoter and strategic partner as per company’s website.
Some of the other rating agencies worth mentioning in India are Crisil, Care, Icra, Fitch and Infomerics Ratings, among others.
Sebi began probing the credit rating agency in 2020 and undertook a joint inspection with the Reserve Bank of India.
Credit rating agencies are institutions which rate the debt instruments of companies. These ratings are used by investors and companies to take business decisions on a particular corporate.
“Given the vital public functions performed by credit rating agencies, it becomes important to ensure that such agencies confirm to the applicable regulatory framework and have high standards of diligence. Sebi regulations and circulars mandate credit rating agencies to give ‘true’, ‘fair’, ‘appropriate’ and ‘accurate’ rating and in order to fulfil such obligation the higher standards of due diligence, integrity, dignity, fairness, etc, are expected from CRAs,” said Ashwani Bhatia, whole-time member, Sebi, in the order.
He also added, however, from the above, it is evident that Brickwork failed to exercise proper skill, care and diligence while discharging its duties as a credit rating agency, which had defeated the very purpose of Regulations i.e. investor protection and orderly development of the securities markets.
In January 2020, the regulator and the Reserve Bank of India undertook a joint inspection of the rating agency, where the two regulators found “several irregularities”. With this, Sebi issued an administrative warning and directed it to rectify the discrepancies and take corrective measures.
In July 2021, Sebi was served a notice by the Karnataka high court, where Brickwork had challenged the recommendation of cancellation of its licence. (ANI)
This report is auto-generated from ANI news service. ThePrint holds no responsibility for its content.