The Ministry of Corporate Affairs is looking to revisit the framework of credit rating agencies as strong corporate governance structure is essential for a market economy, corporate affairs secretary Injeti Srinivas said on Saturday.
According to Srinivas, a lack of valuation standards and regulations is hurting the system.
Rating agencies have come under pressure from authorities and investors over their failure to proactively flag financial problems at Infrastructure Leasing and Financial Services Ltd (IL&FS) until after a subsidiary defaulted on some of its debt earlier this year.
A string of subsequent defaults at IL&FS triggered sharp declines in Indian stock and debt markets, spreading fears of contagion within the rest of the country's financial sector and prompting the government to step in and take control of IL&FS.
Last year, market regulator Securities and Exchange Board of India (Sebi) tightened disclosure and review requirements for credit rating agencies (CRAs) on Tuesday, after the firms failed to raise timely red flags ahead of debt defaults by one of India's top shadow lenders, or NBFCs.
The big three global agencies - Moody's, Standard & Poor's and Fitch - are majority owners of firms in India. Those firms operate separately from their parent companies and have different rating standards.
First Published: Jun 8, 2019 10:55 AM IST
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