Skip to main content

SEBI should not discriminate between rating agencies

SEBI should not discriminate between rating agencies
New CRAs say certain practices in the industry need to be addressed
Domestic and newer creditrating agencies (CRAs) have said certain practices in the industry need to be addressed even as the Securities and Exchange Board of India (Sebi) has sought to streamline the processes and create a level playing field.On December 28 last year, after its final board meeting for 2017, Sebi amended the regulations related to CRAs in the country.

The regulator has said that apart from a Rs 250 million minimum networth requirement, up from Rs 50 million, the promoters of CRAs need to maintain at least 26 per cent for a minimum of three years from the date of being given registration by Sebi.Rajesh Mokashi, managing director and chief executive officer (CEO), CARE ratings, says that “because there are research asset investments to be made byaCRA, in order to offer a certain quality of service in the market, you need a certain element of capital”.

CRAs Business Standard spoke to said they had not received an official circular from the regulator.Sebi has also mandated that hence forth CRAs holding more than 10 per cent of the voting rights and/or shares inaCRA cannot hold a stake of 10 per cent or more in another CRA.
However, this does not apply to holdings in pension funds, institutional investors, insurance schemes, and mutual funds.CRISIL, the S& Powned rating agency, bought an 8.8 per cent stake in CARE Ratings in June last Bank inablock deal.A spokesperson for CRISIL stated that the investment was within this stipulated limit.
Sukanta Nag, CEO of Infomerics Valuation and Ratings, said “if one existing and established CRA, having a good presence in the market, also has a significant stake in another CRA and gets a board representation, then inaway they would controlamajor part of the market.So a monopolistic system comes in, which is why Sebi issued these new conditions”.
Domestic and younger CRAs say they have faced difficulties over the past few years in establishing themselves, acquiring clients, competing with the multinational CRAs, and in “being taken seriously”.Sankar Chakraborti, CEO of Small and Medium Enterprises´ Rating Agency (SMERA),agovernment CRA, says newer CRAs “bring inaand that regulators, the government, and other stakeholders have to be convinced that they (new CRAs) should not suffer under changes in law.
Even with this new condition, which encourages longterm investment and commitment for anyone interested in entering the CRA industry, Chakraborti says more needs to be done to createafair, level playing field between established and legacy CRAs and newer ones.
DRavishankar, founding director of Brickwork Ratings India, said: “Any new CRA will have to work hard in the initial years because they have to establish their name.” “The fact that we have already rated 19,000 companies, means that we have finally been accepted.
So it´s not an overnight game, it took a long time and effort to get acceptability from institutional investors,” said Ravishanker.said: “Idon´t to step into but they a fairer play ground for newer CRAs other means.” example, there much influence brokers who between the banks and issuers.” “Further, this is a high margin business, some CRAs charge margins of 60 to per cent.
Why the protectionism for big CRAs SMERA,a government comes within and Auditor ambit, soIam restricted in competing on margins with other established and larger CRAs." Chakraborti said certain discriminatory tactics had been employed in the past, and in several important cases higher networth CRAs inevitably got the clientele as some clients chose their CRA based on networth criteria.
Further, he said that there was a tendency for even government entities to favour large and foreign owned CRAs.Mokashi said the crossholding condition had plugged a long standing gap in regulation because “if one CRA were to buy more than 10 per cent in another CRA, according to the Sebi regulations of 1999, it would end up being called the ´promoter´ of the CRA.This would send the wrong message to the market that two CRAs are acting in concert.”
SEBI's New Regulation
It is now maintain at least
CRAs holding voting 10% or
This restriction holdings institutional insurance and mutual investments
Younger said there many difficulties they faced past few establishing

The Business Standard, New Delhi, 8th January 2018

Comments

Popular posts from this blog

New income tax slab and rates for new tax regime FY 2023-24 (AY 2024-25) announced in Budget 2023

  Basic exemption limit has been hiked to Rs.3 lakh from Rs 2.5 currently under the new income tax regime in Budget 2023. Further, the income tax slabs in the new tax regime has been changed. According to the announcement, 5 income tax slabs will be there in FY 2023-24, from 6 income tax slabs currently. A rebate under Section 87A has been enhanced under the new tax regime; from the current income level of Rs.5 lakh to Rs.7 lakh. Thus, individuals opting for the new income tax regime and having an income up to Rs.7 lakh will not pay any taxes   The income tax slabs under the new income tax regime will now be as follows: Rs 0 to Rs 3 lakh - 0% tax rate Rs 3 lakh to 6 lakh - 5% Rs 6 lakh to 9 lakh - 10% Rs 9 lakh to Rs 12 lakh - 15% Rs 12 lakh to Rs 15 lakh - 20% Above Rs 15 lakh - 30%   The revised Income tax slabs under new tax regime for FY 2023-24 (AY 2024-25)   Income tax slabs under new tax regime Income tax rates under new tax regime O to Rs 3 lakh 0 Rs 3 lakh to Rs 6 lakh 5% Rs 6

Jaitley plans to cut MSME tax rate to 25%

Income tax for companies with annual turnover up to ?50 crore has been reduced to 25% from 30% in order to make Micro, Small and Medium Enterprises (MSME) companies more viable and also to encourage firms to migrate to a company format. This move will benefit 96% or 6.67 lakh of the 6.94 lakh companies filing returns of lower taxation and make MSME sector more competitive as compared with large companies. However, bigger firms have shown their disappointment since the proposal for reducing tax rates was to make Indian firms competitive globally and it is the large firms that are competing globally. The Finance Minister foregone revenue estimate of Rs 7,200 crore per annum for this for this measure. Besides, the Finance Minister refrained from removing or reducing Minimum Alternate Tax (MAT), a popular demand from India Inc., but provided a higher period of 15 years for carry forward of future credit claims, instead of the existing 10-year period. “It is not practical to rem

Don't forget to verify your income tax return in August: Here's the process

  An ITR return needs to be verified within 120 days of filing of tax return. Now that you have filed your income tax return, remember to verify it because your return filing process is not complete unless you do so. The CBDT has reduced the time limit of ITR verification to 30 days (from 120 days) from the date of return submission. The new rule is applicable for the returns filed online on or after 1st August 2022. E-verification is the most convenient and instant method for verifying your ITR. However, if you prefer not to e-verify, you have the option to verify it by sending a physical copy of the ITR-V. Taxpayers who filed returns by July 31, 2023 but forget to verify their tax returns, will get the following email from the tax department, as per ClearTax. If your ITR is not verified within 30 days of e-filing, it will be considered invalid, and may be liable to pay a Late Fee. Aadhaar OTP | EVC through bank account | EVC through Demat account | Sending duly signed ITR-V through s