(a) Whether the rating agencies are restrained from providing fee based service
other than credit rating and research to its customers;
(b) If so, details thereof and reason therefor;
(c) Whether any agency has opposed the same; and
(d) If so, the details thereof and reaction of the Government thereto?
MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI NAMO NARAIN MEENA)
(a) & (b) According to SEBI (Credit Rating Agencies) Regulations, 1999, a credit
rating agency (CRA) shall not offer fee-based services to the rated entities, beyond
credit ratings and research.
Further, SEBI Guidelines require a CRA to disclose annually:
(a) Its total receipt from rating services and non-rating services,
(b) Issuer wise percentage share of non-rating income of the CRA and its subsidiary to
the total revenue of the CRA and its subsidiary from that issuer, and
(c) Names of the rated issuers who along with their associates contribute 10% or more of
total revenue of the CRA and its subsidiaries
The aforesaid provisions have been made to avoid any conflict of interest and to ensure
arm’s length relationship between credit rating activity and other activities of CRA.
(c) As per available records, no rating agency has opposed the aforesaid guidelines.
(d) Does not arise in view of the reply (c) above.