Market regulator SEBI has decided to simplify the timeline for credit rating agencies (CRAs). Issuing a circular today on January 8, SEBI has changed it from the existing “Days” to “Working Days”. SEBI has taken this decision after consultation with the working group. The circular said, “The Working Group (WG) presented details of the process involved in meeting the relevant requirements within the existing timeline. Moreover, credit rating agencies depend on external entities such as banks and debenture trustees, especially when When delays in loan servicing and default have to be properly established, it is difficult to obtain written confirmation during holidays or non-working holidays.”
SEBI has made changes in the timeline as follows:
1. Current Timeline: Clause 9.2.2 requires Credit Rating Agencies (CRAs) to issue a press release on their website regarding a rating action, if necessary, within 7 days of the occurrence of the event.
Revised Timeline: Now it will be done in 7 working days.
2. Presently as per Clause 9.3.3 if there is a delay in payment of interest/principal by the issuer, the issuer will have to explain the delay in its statement and immediately send the same to the Credit Rating Agency (CRA) for rating review. and the rating action will have to be disseminated through press release within 2 days.
Revised Timeline: Now this process will be completed within 2 working days.
3. Presently as per Section 11.3 Credit Rating Agencies (CRAs) will follow a uniform practice wherein if No Default Statement (NDS) is not submitted for three consecutive months (or the loan is serviced on time through other sources) is not confirmed), this will be considered as a basis for transfer of rating to INC. Thereafter, CRAs have to tag the rating as INC within 7 days of non-submission of NDS for three consecutive months. The CRA may, in its judgment, migrate a rating to the INC category only if the NDS is not received for three consecutive months.
Revised Timeline: 5 working days
4. As per Clause 28.2.1, if the CRA does not receive confirmation of service of the Debt Obligation from the Issuer through the Debenture Trustee one day after the due date, the CRA shall immediately contact the Issuer to confirm payment. Will have to do. If no response is received from the issuer within 2 days of such contact, the CRA must issue a press release under para 28.4.3 and publish the same on its website and on all stock exchanges where the security is listed.
Revised Timeline: 1 working day and 2 working days respectively.