MUMBAI, Oct 7 (NNN-PTI) – India’s capital market regulator, yesterday, issued a winding-up order against a domestic credit rating agency, for the first time ever, citing for failure to exercise proper skill, care and diligence, while discharging its duties.
The Securities and Exchange Board of India (SEBI), in its order, cancelled the license of Brickwork Ratings, as a credit rating agency and asked it to wind up its operations in six months.
“The contraventions/deficiencies observed in the first and second inspections, led to the initiation of separate adjudication proceedings against Brickworks,” the SEBI order said.
Last month, India’s Supreme Court allowed SEBI to conclude the proceedings for the cancellation of the license of Brickwork for allegedly violating various credit rating regulations.
SEBI had begun investigating the credit rating agency in 2020, and undertook a joint inspection with the Reserve Bank of India, India’s central bank, and found several lapses in not following due process during rating exercises.
Founded by banking and credit rating professionals, and promoted by state-run lender, Canara Bank, as a strategic partner, Brickwork had rated debt instruments, bonds, bank loans, securitised papers worth 231.5 billion U.S. dollars, and also fixed deposits and commercial papers etc. worth over 10.2 billion dollars.
The ratings by such credit rating agencies were used by investors, to take business decisions on investing in such financial instruments.– NNN-PTI
