SEBI Issues Standardised Framework for CRAs

SEBI (Securities and Exchange Board of India) recently issued a standardised framework for CRAs (credit rating agencies) to use for classifying industries in their rating exercises and research activities.

In a circular, SEBI said the framework will help enable uniformity in the classifications being used across sectors and in the securities market.

After examining the existing industry classification structures across sectors, SEBI's Market Data Advisory Committee developed a harmonised four-level industry classification framework for stakeholders in the Indian securities market.

SEBI is asking CRAs to use the standardised industry classification in their rating exercises, peer benchmarking, and research activities, including research covering the economy and specific industries or companies.

The new industry classification will apply to CRAs from 1 October 2022.

In a separate circular, SEBI has extended the deadline for CRAs to align their rating scales by three months from 31 March to 30 June 2022.

The requirements were issued in a July 2021 circular, which required CRAs to either align their rating scales with the rating scales prescribed by SEBI or other financial sector regulators.

SEBI said the extension was granted after it received representation from CRAs asking for such an extension.

Source: Regulation Asia