{"id":2374,"date":"2019-06-22T01:43:26","date_gmt":"2019-06-22T01:43:26","guid":{"rendered":"https:\/\/www.gkseries.com\/blog\/?p=2374"},"modified":"2019-06-22T01:43:28","modified_gmt":"2019-06-22T01:43:28","slug":"sebi-introduced-enhanced-disclosure-guidelines-for-credit-rating-agencies","status":"publish","type":"post","link":"https:\/\/www.gkseries.com\/blog\/sebi-introduced-enhanced-disclosure-guidelines-for-credit-rating-agencies\/","title":{"rendered":"SEBI introduced enhanced disclosure guidelines for credit rating agencies"},"content":{"rendered":"\n<p>The markets regulator<strong>Securities and Exchange Board of India\n(SEBI)<\/strong>introduced<strong>&nbsp;enhanced\ndisclosure guidelines<\/strong>&nbsp;for<strong>&nbsp;credit rating agencies (CRA).<\/strong>&nbsp;SEBI\nasked the rating companies to<strong>&nbsp;disclose\nthe probability of default<\/strong>&nbsp;for the issuers they rate,\ntroubled by the raters\u2019 track record of detecting defaults or near-defaults.<br>\n<br>\n<strong>Reason\nfor the move:<\/strong><br>\nSince the global&nbsp;<strong>financial crisis in 2008<\/strong>,\nthe credibility of the rating agencies has been<strong>&nbsp;eroding&nbsp;<\/strong>because of th<strong>e conflict of interest&nbsp;<\/strong>that\narises from the fact that they are paid by the issuers to rate their securities\nand for their failure to downgrade troubled firms until they are on the verge\nof bankruptcy.<br>\nThe&nbsp;<strong>recent\nInfrastructure Leasing and Financial Services Ltd&#8217;s (IL&amp;FS) liquidity\ncrisis<\/strong>&nbsp;among non-bank lenders in India has focused\nattention again on credit rating agencies.<br>\n<br>\n<strong>The\nguidelines:<\/strong><br>\nThe rating companies must create an uniform\nprobability of&nbsp;<strong>default\nbenchmark<\/strong>&nbsp;for each rating category on their website, for\none-year, two-year and three-year cumulative default rates, both for the short\nterm and long term.<br>\nThey should use&nbsp;<strong>marginal default methodology<\/strong>&nbsp;to\narrive at default rates. The methodology should be revised. This can bring the\nrating companies in line with global best practices and increased disclosures\nfor liquidity and rating sensitivity factors.<br>\nSEBI defined<strong>&nbsp;the terms that the companies should use to describe\nthe liquidity<\/strong>&nbsp;position of issuer, that is, strong,\nadequate, stretched and poor.<br>\n<strong>Tracking\nthe probability of default<\/strong>&nbsp;is\na step towards aligning Indian rules with global standards. The Probability of\ndefault is the likelihood of a default over a particular period.&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The markets regulatorSecurities and Exchange Board of India (SEBI)introduced&nbsp;enhanced disclosure guidelines&nbsp;for&nbsp;credit rating agencies (CRA).&nbsp;SEBI asked the rating companies to&nbsp;disclose the probability of default&nbsp;for the issuers they rate, troubled by the raters\u2019 track record of detecting defaults or near-defaults. Reason for the move: Since the global&nbsp;financial crisis in 2008, the credibility of the rating agencies has [&hellip;]<\/p>\n","protected":false},"author":13,"featured_media":2375,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[45],"tags":[],"class_list":["post-2374","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-current-affairs-articles"],"_links":{"self":[{"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/posts\/2374","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/users\/13"}],"replies":[{"embeddable":true,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/comments?post=2374"}],"version-history":[{"count":1,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/posts\/2374\/revisions"}],"predecessor-version":[{"id":2376,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/posts\/2374\/revisions\/2376"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/media\/2375"}],"wp:attachment":[{"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/media?parent=2374"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/categories?post=2374"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.gkseries.com\/blog\/wp-json\/wp\/v2\/tags?post=2374"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}