Concerned over companies keeping under wraps their bad credit ratings and publicising only the favourable ones, market watchdog SEBI is mulling over ways to curb this ‘rating shopping’ menace.
SEBI is considering making it mandatory for credit rating agencies (CRAs) to make public even those ratings that are not acceptable to the companies getting rated, sources close to the development said.
At the same time, the CRAs, who are paid by the companies themselves for assigning them a rating, may be asked to put in place clear and effective ‘Chinese Walls’ between their analytical and business development teams, sources said.
Other steps being considered include, allowing CRAs to offer unsolicited ratings, asking the companies to get themselves or their securities rated from two or more competing agencies, and enhancing disclosure on relationships between CRAs and clients.
