Panel favours monitoring of credit rating agencies by SEBI

India's capital markets regulator, the Securities and Exchange Board of India (SEBI) should have a bigger say in the activities of credit rating agencies (CRAs), a committee constituted by the finance ministry said yesterday.

However, the committee, headed by finance ministry joint secretary K P Krishnan said that prior to formulating any regulation in this line, SEBI needs to consult with other regulators.

''Although, prima facie, there is no immediate concern about the operations and activities of CRAs in India even in the context of the recent financial crisis, the existing regulations on CRAs need to be strengthened in the face of crisis prevailing in the financial sector,'' it added.

The report, posted by the Reserve Bank of India (RBI) in its website yesterday for wider discussions, has taken note of international action in this regard and, inter alia, has recommended that there is a need for enhanced disclosure, continuation of the issuer-pays model, strengthened process and compliance audit, reporting of ownership changes, disclosure of default and transition statistics and strengthening of the regulation of the CRAs in tune with these suggestions.

The committee was constituted by the ministry at the instance of the High Level Coordination Committee on Financial Markets (HLCCFM) to revisit the legal and policy framework for regulating the activities of CRAs in the wake of global financial crisis.

It said CRAs should disclose details of revenues, especially those that involve conflict of interest such as fees collected by such agencies' subsidiaries.