Sebi mulls allowing CRAs to rate instruments outside its regulatory purview
watchdog Sebi on Wednesday proposed permitting
credit rating
agencies (CRAs) to undertake the rating of financial instruments that may come under other financial sector regulators, even if they have not issued any rating-related guidelines.
Under the current CRA regulations,
credit
rating agencies are only allowed to rate securities that are listed or proposed to be listed on a stock exchange recognised by Sebi.
by Taboola
by Taboola
Sponsored Links
Sponsored Links
Promoted Links
Promoted Links
You May Like
Free P2,000 GCash eGift
UnionBank Credit Card
Apply Now
Undo
However, the regulations do not stop CRAs from rating products, securities, or issuers if such ratings are done under the guidelines of another financial sector regulator or any authority specified by Sebi.
Play Video
Pause
Skip Backward
Skip Forward
Unmute
Current Time
0:00
/
Duration
0:00
Loaded
:
0%
0:00
Stream Type
LIVE
Seek to live, currently behind live
LIVE
Remaining Time
-
0:00
1x
Playback Rate
Chapters
Chapters
Descriptions
descriptions off
, selected
Captions
captions settings
, opens captions settings dialog
captions off
, selected
Audio Track
default
, selected
Picture-in-Picture
Fullscreen
This is a modal window.
Beginning of dialog window. Escape will cancel and close the window.
Text
Color
White
Black
Red
Green
Blue
Yellow
Magenta
Cyan
Opacity
Opaque
Semi-Transparent
Text Background
Color
Black
White
Red
Green
Blue
Yellow
Magenta
Cyan
Opacity
Opaque
Semi-Transparent
Transparent
Caption Area Background
Color
Black
White
Red
Green
Blue
Yellow
Magenta
Cyan
Opacity
Transparent
Semi-Transparent
Opaque
Font Size
50%
75%
100%
125%
150%
175%
200%
300%
400%
Text Edge Style
None
Raised
Depressed
Uniform
Drop shadow
Font Family
Proportional Sans-Serif
Monospace Sans-Serif
Proportional Serif
Monospace Serif
Casual
Script
Small Caps
Reset
restore all settings to the default values
Done
Close Modal Dialog
End of dialog window.
In its consultation paper, Sebi proposed that CRAs may be permitted to undertake activities that are not regulated by it, subject to certain conditions.
"CRA may undertake rating of financial instruments, which fall under the purview of any other FSR, provided it shall comply with the regulatory framework, if any, as may be specified by the respective FSR for the matters relating to policy, eligibility criteria, risk management, investor grievance or dispute handling mechanism, inspection, enforcement and claims," Sebi proposed.
Live Events
The regulator suggested that CRAs may undertake only those rating activities that are fee-based and non-fund-based. Additionally, such activities should be carried out strictly on an arm's length basis through one or more Separate
Business
Units (SBUs), which should be segregated by a Chinese Wall and ring-fenced from Sebi-regulated functions.
The regulator further stated that CRAs should ensure the transfer of all non-Sebi-regulated activities to these separate business units within six months from the date of notification of the proposal.
These SBUs would also be required to establish distinct grievance redressal mechanisms, including escalation procedures, which are separate from those applicable to Sebi-regulated activities.
Moreover, CRAs should maintain independent records within the SBU for such non-Sebi-regulated activities, and the personnel engaged in these functions must be distinct from those involved in Sebi-regulated operations.
However, crossing the Chinese Wall may be permitted for staff, subject to due procedures approved by the Board of Directors and proper documentation.
Notably, this restriction does not apply to key managerial personnel.
Sebi also clarified that the minimum
net worth
requirement of a CRA, as specified under the CRA Regulations, should be protected from any impact arising out of non-Sebi-regulated activities.
A CRA will be required to disclose on its website the list of activities that are not regulated by Sebi, along with a disclaimer clearly stating that Sebi's investor protection mechanisms will not apply to any grievances or disputes related to such activities. This disclosure should also be prominently displayed in rating reports associated with non-Sebi-regulated activities.
Prior to undertaking any such activities, the CRA should provide an upfront written disclosure to all relevant stakeholders, including clients, beneficiaries, and counterparties. This disclosure should be included in all engagement letters, contracts, agreements, and business communications, indicating that the activities do not fall within Sebi's regulatory framework.
Also, stakeholders should confirm, at the time of engagement, that they understand the nature of the activities, associated risks, and the non-availability of Sebi's investor protection mechanisms.
For existing and ongoing arrangements related to non-Sebi-regulated activities, CRAs should make the necessary disclosures and obtain acknowledgements from stakeholders. A compliance report on this should be submitted to Sebi within six months of the notification.
In addition, every CRA undertaking any activity outside the purview of Sebi should submit an undertaking as part of its half-yearly internal audit report, confirming compliance with the specified requirements. This report should be duly reviewed and approved by the CRA's board of directors.
Sebi has invited public comments on the proposal until July 30, 2025.
The move comes in response to representations from industry participants and stakeholders, who have requested that CRAs be allowed to rate financial products and instruments under the purview of other FSRs, even where no rating-related guidelines exist.
It was highlighted that such rating activities are closely aligned with CRAs' current business, and allowing them could lead to operational synergies while filling an existing gap in the market.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Mint
an hour ago
- Mint
Why Sebi is drowning in record investor complaints—from finfluencers to faulty compliance
Investor complaints against listed companies jumped to record highs in FY25, but not for the reasons one might assume. Far from signalling a collapse in corporate behaviour, experts say the spike reflects a more vocal investor base, easier online filing, and the Securities and Exchange Board of India's (Sebi) tightened surveillance. Yet, the surge also exposes cracks that persist beneath the surface: companies continue to falter on basic compliance, back-end resolution remains sluggish, and a new layer of risk has emerged with finfluencer-led mis-selling. At the same time, Sebi's enforcement arm has been flexing more muscle. Settlements have scaled up to record levels, scrutiny of advisers and pseudo-educators has intensified, and the regulator is leaning on new digital tools to keep pace with a market where retail investors are louder and expectations are higher. Complaints surge, but why? According to the latest annual report of Sebi, stock exchanges received 12,473 complaints against listed firms in fiscal year 2024–25, up 43% from 8,726 a year earlier. Of these, over 12,200 were resolved, with 691 pending at year-end, typically involving missed dividends, delays in corporate actions, or disputes over rights and bonus issues. On SCORES 2.0, Sebi logged more than 68,000 complaints. Combined with CPGRAMS and SECURE, total cases were about 71,000, with just over 4,000 outstanding actionable grievances at year-end. Rolled out in April 2024, SCORES 2.0 auto-routes complaints, imposes a 21-day ATR deadline, and allows a two-stage review with auto-escalation—shortening resolution timelines. CPGRAMS is the Centralized Public Grievance Redress and Monitoring System, a government-run online platform for citizens to file complaints with various public authorities, while SECURE refers to a new online system being developed by Sebi specifically for investors to lodge their grievances. Experts caution the jump reflects digitisation and awareness rather than deteriorating corporate conduct. 'The surge reflects basic compliance lapses colliding with a more empowered and vocal retail investor base," explained Sonam Chandwani, managing partner at KS Legal & Associates. 'For instance, an investor who previously might have ignored a delayed dividend because the process of complaint was cumbersome; today, the same grievance is lodged within minutes on the portal." She added that operational lapses such as repeated delays in crediting bonus shares or inadequate disclosures around related party transactions continue to dominate complaints. 'While Sebi has fixed the front end of grievance capture, companies have yet to strengthen the back end of compliance and investor relations." she said. Kunal Sharma, founder of Taraksh Lawyers & Consultants, said, 'Investors are speaking up more, but the response mechanism hasn't yet kept pace with their expectations." He added the friction has shifted from filing to closure as corporate back-ends lag a more responsive investor base. Advisory ecosystem in the crosshairs If grievance redress is Sebi's front line of defence, its crackdown on advisers and finfluencers shows the regulator widening the battlefield. Beyond issuer lapses, Sebi has intensified action against investment advisers (IAs) and research analysts (RAs), including penalties, cancellations, and shutdown directives, while stepping up scrutiny of unregistered advisory on social media. The campaign targets 'education' or 'training' models used to disguise advisory, with enforcement orders against select entities, including action in the Asmita Patel matter, and fresh circulars and consultations to curb live-market data use by educators and restrict promotions by unregistered entities. Chandwani noted persistent grey zones: 'Enforcement action against such actors is episodic; one entity is banned, only for several others to emerge under new names. She argued that definitional clarity and broader coverage are needed to net disguised models. 'Unless Sebi broadens its interpretation of what constitutes advice to include indirect and disguised forms, it will be akin to plugging leaks in a sinking ship," Chandwani said. Advanced surveillance will be pivotal, experts said. 'Sebi will need to go beyond traditional monitoring and adopt AI tools to scan social media content in real time, map referral and follower networks, and trace fee flows between influencers, platforms, and registered intermediaries. This is critical to detect hidden revenue-sharing and pseudo-advisory activity that currently slips through the cracks," Sharma said. The systemic risk posed by finfluencers remains a concern. 'Gaps remain around enforcement speed and jurisdictional overlaps with social media platforms," Narinder Wadhwa, MD & CEO of SKI Capital Services Ltd said. 'Influencers need to be checked, as on the pretext of advising, they are often found mis-selling or creating unrealistic expectations for retail investors," Wadhwa added. To channel activity into regulated pipes, Sebi has eased access for genuine entrants—relaxing qualification norms, lowering entry barriers with refundable deposits in lieu of high net-worth requirements, and centralising fee collection. 'These steps have reduced friction, especially for smaller players, while core safeguards remain unchanged so investor protection has not been diluted", Sharma said. Settlements scale up Even as complaints and finfluencers test Sebi's bandwidth, its enforcement arm has been scaling up settlements. Applications climbed to 703 in FY25 from 434 in FY24; orders passed rose to 284 from 114; and collections jumped to about ₹799 crore from around ₹94 crore, largely due to a handful of outsized cases. 'The drastic rise in the settlement amount can be attributed to a few cases like the settlement order in the TAP matter," Vasudha Goenka, partner at Cyril Amarchand Mangaldas observed. TAP refers to the National Stock Exchange's Trade Allocation Practices and related access controls examined in connection with co-location–era systems, where certain market participants allegedly gained unfair advantages. NSE and others settled the TAP system matter with Sebi for ₹643.05 crore in October 2024, significantly boosting FY25 collections. Looking ahead, Wadhwa said enforcement may increasingly home in on copy-trading schemes, broker–influencer referral arrangements, and courses or pseudo-educational products that mask advice. 'Ensuring quick, visible action here would send a strong deterrence signal and protect new entrants into capital markets," he said. The road ahead Sharma warned the complaint curve next year could be reshaped by sophisticated, tech-driven risks: 'AI-driven scams mimic official institutions, producing convincing frauds at scale. The complaint curve next year is likely to be shaped by more complex, tech-driven risks," he said. Chandwani expects a shift from reactive enforcement to 'pre-emptive rulemaking," with liability extending across the influencer–intermediary chain.
Mint
an hour ago
- Mint
Want to advertise your brand in Asia Cup 2025 during India matches? What's the ad rate in IND vs PAK clash? Know details
The advertisement rates for the Asia Cup 2025 have skyrocketed with the India vs Pakistan clash driving the biggest demand. With just merely 20 days left for continental showpiece to begin from September 9 in United Arab Emirates (UAE), BCCI's media rights holder till 2031, Sony Pictures Networks India (SPNI) has priced the Television ads at ₹ 14 lakh- ₹ 16 lakh per 10 seconds. The Asia Cup 2025 will be aired on Sony Sports channels and live streaming on SonyLIV. Based on an Economic Times reports, the Ad packages on TV is priced at ₹ 18 crore for Co-presenting sponsorship while it would cost ₹ 13 crore for associate sponsorship. The spot-buy packages would cost ₹ 16 lakh per 10 seconds or ₹ 4.48 crore for all India and non-India games.
Time of India
an hour ago
- Time of India
Best aggressive hybrid mutual funds to invest in August 2025
Live Events Mixed portfolio Aggressive hybrid schemes to invest in August 2025: SBI Equity Hybrid Fund Canara Robeco Equity Hybrid Fund Mirae Asset Hybrid Equity Fund ICICI Prudential Equity and Debt Fund Quant Absolute Fund You might have heard from your favorite mutual fund manager or experts that hybrid funds are likely to show their resilience in the coming year. Hybrid mutual funds or schemes that invest mostly in equity and debt fare better in an uncertain or volatile environment. Mutual fund experts believe that the markets are likely to be cautious and investors should also proceed with hybrid funds are one of the popular hybrid mutual fund categories. These schemes are mandated to invest in a mix of equity (or stocks) and debt. As per Sebi norms, these schemes must invest 65-80% in stocks, and 20-35% in debt. This mixed portfolio helps to deal with the market volatility better. When the equity market is in turmoil, the debt part of the portfolio softens the blow. This helps new investors to continue with their investments without worrying too much about you are bothered about the uncertainties and volatility in the market, you can consider investing in aggressive hybrid mutual funds . Mutual fund advisors typically recommend aggressive hybrid fund schemes to 'conservative' equity investors to create wealth to achieve their long-term financial goals.A 'conservative equity investor' is not the same as a conservative investor. A conservative investor doesn't want to take risks at all. These investors typically park their money in bank deposits, bonds, etc which give them predictable returns. A conservative equity investor is ready to take risk, but he or she doesn't want too much risk and volatility. So, a conservative equity investor typically wants to grow wealth without exposing her investments to too much advantage of investing in these schemes is their mixed portfolio of equity and debt. In order to maintain the asset allocation, the fund manager would constantly book profits, and this will boost the returns. Suppose the equity allocation has gone beyond the original plan in a bull market. The fund manager would sell the stocks to maintain the allocation. This profit-booking, over a long period of time, would enhance the you can do such an allocation and create your own mutual fund portfolio. However, when you book profits, you may have to pay taxes on gains of over Rs 1 lakh in a financial year. A mutual fund, on the other hand, is not liable to pay taxes. This again would help investors to enhance their that you know about these schemes, here are the points you should remember before deciding to invest in aggressive hybrid funds. One, the mixed portfolio of these schemes helps you to limit volatility and create wealth over a long period. Two, regular profits booking would help these schemes to boost profits. Three, they offer a tax advantage. Lastly, don't rely on regular dividends from these schemes to draw up a regular you should always remember none of these factors make aggressive hybrid schemes risk free. Any scheme that invests a minimum 65% in stocks, can't be risk free. Stocks are risky. So, you should be prepared for some volatility in the short is an update: SBI Equity Hybrid Fund has been in the third quartile in the last seven months. The scheme had been in the fourth quartile earlier. Mirae Asset Hybrid Equity Fund has been in the third quartile in the last four months. The scheme had been in the fourth quartile before that. Canara Robeco Equity Hybrid Fund has been in the third quartile for the last 27 months. Note, these schemes have been part of our recommendation list in 2024, too. We have been closely watching these schemes. Please follow our monthly updates if you are investing in these you want to invest in these schemes, you may be interested to know how we chose these schemes. Take a look at our methodology:ETMutualFunds has employed the following parameters for shortlisting the hybrid mutual fund daily for the last three Exponent, H is used for computing the consistency of a fund. The H exponent is a measure of the randomness of NAV series of a fund. Funds with high H tend to exhibit low volatility compared to funds with low H.i) When H = 0.5, the series of returns is said to be a geometric Brownian time series. These types of time series are difficult to When H is less than 0.5, the series is said to be mean When H is greater than 0.5, the series is said to be persistent. The larger the value of H, the stronger is the trend of the seriesWe have considered only the negative returns given by the mutual fund scheme for this measure.X = Returns below zeroY = Sum of all squares of XZ = Y/number of days taken for computing the ratioDownside risk = Square root of ZIt is measured by Jensen's Alpha for the last three years. Jensen's Alpha shows the risk-adjusted return generated by a mutual fund scheme relative to the expected market return predicted by the Capital Asset Pricing Model (CAPM). Higher Alpha indicates that the portfolio performance has outstripped the returns predicted by the returns generated by the MF Scheme =[Risk Free Rate + Beta of the MF Scheme * {(Average return of the index - Risk Free Rate}Fund Return – Benchmark return. Rolling returns rolled daily is used for computing the return of the fund and the benchmark and subsequently the Active return of the Hybrid funds, the threshold asset size is Rs 50 crore
