Image Source: Adda247
India’s market regulator SEBI has issued a directive requiring Credit Rating Agencies (CRAs) to transfer all activities not regulated by the Board into a separate business unit within six months of notification.
Key Highlights:
-
CRAs must establish distinct units for nonSEBIregulated services such as securitization trusteeship, escrow agency, and monitoring roles.
-
These units must operate with separate staff, records, and grievance redressal mechanisms, ensuring clear boundaries from SEBIregulated functions.
-
Shared infrastructure like IT systems may be permitted with board approval, but legal liabilities must remain segregated.
Governance Measures:
-
CRAs must disclose on websites and client communications that certain services are outside SEBI’s regulatory purview.
-
Clients must acknowledge this distinction in writing, reinforcing transparency and investor awareness.
-
A halfyearly compliance report, approved by the board, will be mandatory to confirm adherence.
This move aims to enhance regulatory clarity, protect investors, and streamline CRA operations.
Sources: TaxGuru, NDTV Profit, News9Live
Advertisement
Advertisement