TMI BlogGuidelines for Credit Rating AgenciesX X X X Extracts X X X X X X X X Extracts X X X X ..... iscussions with the issuer, its management, auditors and bankers which have a bearing on the credit rating, 1.3 Decisions of the rating committee(s), including voting details and notes of dissent, if any, by any member of the rating committee, and 1.4 If a quantitative model is a substantial component of the credit rating process, the rationale for any material difference between the credit rating implied by the model and the credit rating actually assigned. 1.5 These records should be maintained till five years after maturity of instruments and be made available to auditors and regulatory bodies when sought by them. 2. Default Studies Default studies are central to evaluating the performance of a credit rating agency and whether its ratings can predict default over a period of time. In order to promote transparency and to enable the market to best judge the performance of the ratings, the CRA, should publish information about the historical default rates of CRA rating categories and whether the default rates of these categories have changed over time, so that the public can understand the historical performance of each category and if and how rating categories ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equirements in case of non-structured ratings, the following additional requirements shall also be complied with: a. A CRA or its subsidiaries shall not provide consultancy or advisory services regarding the design of the structured finance instrument. b. The rating symbols shall clearly indicate that the ratings are for structured finance products. 5. Unsolicited Credit Ratings 5.1 In case of unsolicited credit ratings, i.e. the credit ratings not arising out of the agreement between a CRA and the issuer, credit rating symbol shall be accompanied by the word UNSOLICITED in the same font size. 5.2 A CRA shall monitor and disclose credit rating during the life of the rated securities, as if it were a solicited rating. 6. Disclosures A CRA shall make all the disclosures stipulated below on their websites. In case of listed securities, the CRA shall also make disclosures to the stock exchanges as specified in the SEBI (Credit Ratings) Regulations, 1999. For ratings assigned and their periodic reviews, the CRA shall issue press releases which shall also be kept on their websites. Where a specific format has been prescribed, the disclosures sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Products 6.4.1 While publishing the ratings of structured finance products and their movements, a CRA apart from following all the applicable requirements in case of non-structured ratings shall also disclose the track record of the originator and details of nature of underlying assets while assigning the credit rating. The track record shall include a brief description of the financials of the originator, rating migrations to speculative categories and defaults. 6.4.2 A CRA shall also disclose at least once in every six months, the performance of the rated pool, i.e., collection efficiency, delinquencies. A CRA shall also provide a detailed description of the underlying pools including ageing, Credit enhancements such as liquidity supports, first and second loss guarantee provided shall also be disclosed. 6.5 Unsolicited Credit Ratings 6.5.1 While publishing unsolicited ratings and their movements, a CRA apart from following all the applicable requirements in case of solicited ratings shall make the following disclosures: a. the extent of participation by the issuer, its management, bankers and auditors in the credit rating process. b. the information us ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Issuer Instrument Issue size (Rs. Millions) Rating 1 2 3 4 5 6 ANNEXURE II Movement* of each credit rating Rating Movements between Apr-Sep / Oct - Mar Sl. No. Name of the Issuer Rating prior to Revision Rating Post Revision 1 2 3 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Initial Rating Date of Initial Rating Rating after 1 st Revision Date of 1 st Revision Rating after 2 nd Revision Date of 2 nd Revision Rating after 3 rd Revision Date of 3 rd Revision -- 1 2 3 4 ANNEXURE VI List of defaults separately for each rating category ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B or equivalent 1 2 3 C or equivalent 1 2 3 P1 / A1 / PR1 / F1 or equivalent 1 2 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B or equivalent C or equivalent ANNEXURE VIII Unsolicited Credit Rating* Sl No Name of the Issuer Rating Assigned Financial Year 1 Financial Year 2 Financial Year 3 1 2 3 4 * If in a particular financial year, a rating has subsequently been changed, then that shall also be disclosed Solicited Credit Ratings assigned to those issuers mentioned in the table above in the last financial year** Sl No Name of the Issuer Rating Assigned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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