Skip to main content

Sebi plans new rules for rating agencies

By
The Securities and Exchange Board of India (Sebi) is planning to issue fresh guidelines for credit rating agencies, amid instances of lack of disclosures and conflict of interest between such agencies and issuers. The regulator might also prescribe rules for fund houses to avoid concentration risks in a single debt security. The move is aimed at avoiding a repeat of recent crises such as the Amtek Auto default, which hit investors of JP Morgan Mutual Fund.
“What we have started looking at is why it is that in certain cases, in which papers were being rated investment grade, the rating was suddenly suspended? Maybe, there was genuine reason. I am not questioning it but that has to be explained to investors and the public at large. We felt that was not being done. We had a meeting with rating agencies and explained our concern to them,” Sebi Chairman U K Sinha said on the sidelines of an annual capital market summit organised by the Federation of Indian Chambers of Commerce and Industry.
Sinha said Sebi was also looking at whether there was any conflict of interest in the rating process followed by agencies.
To avoid concentration risks towards asingle debt instrument, the regulator is considering tightening investment rules for mutual fund houses. “ We have observed that perhaps, the mutual fund sector isn’t being very careful about the investments it is making in debt products and the process it is following,” Sinha said.
Sebi is also planning to ease norms to make online investing easier. It is planning to do away with the requirement of in- person verification, a know- your- customer requirement under current rules.
The move would help increase mutual fund penetration and enable the sale of financial products through e- commerce platforms.
Business Standard, New Delhi, 28th Oct. 2015

Comments

Post a Comment

Popular posts from this blog

Household debt up, but India still lags emerging-market economies: RBI

By
  Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...
Post a Comment
Read more

External spillovers likely to hit India's financial system: RBI report

By
  While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...
Post a Comment
Read more

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

By
  New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...
Post a Comment
Read more