SEBI Floats New Flexibility for Credit Rating Agencies in Latest Consultation Push

Image Source: Free Press Journal

India’s Securities and Exchange Board (SEBI) has released a fresh consultation paper proposing expanded operational freedom for Credit Rating Agencies (CRAs), including permission to undertake activities beyond SEBI’s regulatory scope.

CRAs may be allowed to rate financial instruments governed by other regulators such as RBI or IFSCA, without needing separate

SEBI registration.

SEBI aims to introduce an activitybased framework, enabling CRAs to operate under multiple regulatory umbrellas depending on the nature of the rated product.
Ratings conducted under nonSEBI jurisdictions must clearly disclose the overseeing authority to avoid regulatory ambiguity.

Governance and Oversight:

CRAs must maintain transparency in rating methodologies and ensure no conflict of interest arises from crossregulatory operations.
SEBI emphasizes that while flexibility is being introduced, investor protection and rating integrity remain paramount.
Stakeholder Feedback:
Public comments are invited to refine the framework, signaling SEBI’s collaborative approach to policy evolution.

Sources: Moneycontrol, SEBI, TaxGuru.