After having found misconduct by several rating agencies, the ministry of corporate affairs (MCA) has asked its investigative body -- Serious Fraud Investigation Office (SFIO) to probe the role of rating agencies in various fraud cases, it is examining.
"We believe the process adopted by rating agencies has not been objective in all cases. SFIO is looking into serious issues with governance framework and possible personal misconduct," a senior MCA official told CNBC-TV18.
Citing the specifics, the official said that the practices such as rating a company based on its parent’s credit profile or revising the rating with “malafide intent” are among the "governance issues" that SFIO will be probing, the official said.
Role of credit rating agencies came under scanner after IL&FS and other cases came to the fore.
Recently, credit rating agency CARE sent its managing director and chief executive Rajesh Mokashi on leave in lieu of an inspection into an anonymous complaint received by the Securities and Exchange Board of India (Sebi).
"The board of directors of CARE has decided to appoint T.N. Arun Kumar, currently executive director (Ratings) as interim chief executive officer ("CEO") of the company. He will now be part of rating operations to ensure the independence of ratings," CARE said in a stock exchange filing on July 17.
Earlier this month, credit rating agency ICRA Ltd, also sent its managing director and chief executive Naresh Takkar on leave, pending an enquiry, as per media reports.
These developments reportedly track an anonymous complaint alleging lapses when ICRA assigned a high rating of AAA to IL&FS last year, with ICRA's top brass meddling in the rating process.
First Published: Jul 19, 2019 8:02 PM IST
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