CARE Ratings has taken a leading role in establishing the “Association of Indian Rating Agencies” to build trust among all stakeholders.
The association was founded because the absence of a representative body in the industry proved to be detrimental to building trust among all stakeholders.
Therefore, several associations were established as a non-profit organization (NPO), CARE Ratings announced in a regulatory application.
“The last two years have been difficult and turbulent for the CRA industry. The industry, along with regulators, has taken several steps to improve rating standards, standards and data disclosure processes, ”the CRA said.
Although CRAs are expected to provide forward-looking opinions on the borrower’s ability and willingness to pay its debts in full and on time, they have been given a failure not to do so in a case such as IL&FS and DHFL.
The association’s goals include interacting with the Indian Securities and Exchange Committee (SEBI) and representing market regulators in all matters concerning the rating industry.
It will represent the Government of India and its Ministries and Departments, the Reserve Bank of India (RBI) and other bodies in all matters relating to the rating industry.
Further, the association intends to disseminate information on the evaluation industry and conduct studies and research directly and / or in collaboration with other bodies; and develop and maintain cooperative efforts that promote the interaction and exchange of ideas, information, knowledge and skills among credit rating agencies in India that would enhance their capabilities and role in providing reliable market information
In addition, the NPO will undertake activities aimed at promoting the adoption of best practices and common standards that ensure high quality and comparability of credit ratings among agencies, following the highest standards of ethics and professional conduct.
The association floated with an approved share capital of 5 rus and a paid-in capital of 1.05 lakhs.
MD and CARE Ratings CEO Ajay Mahajan is the first president of the Association. The presidency will be a rotation among the members of the NPO entities.
The agency said it is proposing to acquire 5,250 ownership stakes – 50 per cent of the initial stake in the NPO entity. The ratio of the number of equity stakes and / or percentages will decline when other CRAs become members of NPO entities, CARE said.
There are currently seven credit rating agencies registered with SEBI – CRISIL Ratings, ICRA, CARE Ratings, India Ratings and Research, Brick Ratings, Acuite Ratings and Research and Rating and Rating Infomerics.