Sebi issues provisions for CRAs closing operations

The Securities and Exchange Board of India on Thursday laid out transition provisions for credit rating agencies (CRAs) seeking to surrender their registration or whose registrations are suspended or cancelled.

In case of cancellation or surrender of certificate of registration, the credit ratings assigned by the CRA shall be valid till such time the client withdraws the assignment and/or migrates the assignment to another CRA.

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Upon cancellation, surrender or suspension of certificate of registration of a CRA, services of the CRA concerned cannot be used by listed entities or issuers. The credit rating assigned by such CRA will be treated as withdrawn if an issuer furnishes an undertaking that another rating is available. Rules pertaining to non-cooperation will not be applicable to issuers dealing with such CRAs.

On and from the date of the order, or the date of submission of request for surrender of certificate of registration, the CRA shall not take any new clients or fresh mandates; allow its clients to withdraw any assignment given to the CRA without any additional cost to such clients; facilitate an orderly migration of assignments as desired by clients to other CRAs and continue to comply with the provisions of the CRA Regulations. Such a CRA should make provisions as regards liability incurred or assumed by it.