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TMI BlogGuidelines for Credit Rating AgenciesX X X X Extracts X X X X X X X X Extracts X X X X ..... redit rating, it has been decided, in consultation with the CRAs, to prescribe the following transparency and disclosure norms for them: 1. Rating Process A CRA shall keep the following records in support of each credit rating and review / surveillance thereof: 1.1 The important factors underlying the credit rating and sensitivity of such credit rating to changes in these factors, 1.2 Summary of discussions 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 ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod / No. of issuers outstanding at the beginning of the three-year period 2.2 For the above purposes, the following terms shall have the meaning as under : 2.2.1 Static Pool : Non-defaulted ratings that were outstanding at the beginning of any period 2.2.2 Default : Non-payment of interest or principal amount in full on the pre-agreed date. A CRA shall recognize default at the first instance of delay in servicing of interest or principal on the rated debt instrument. 2.2.3 Default Rate: The number of defaults among rated entities in the static pool as a percentage of the total number of entities in the static pool. 2.2.4 Averaging : All averaging across static pools for default rate computations must be based on the weighted average ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 shall be made in that format. 6.1 Rating Procedure A CRA shall formulate and disclose its policies, methodology and procedures in detail re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclose, in case of accepted ratings, its conflict of interest, if any, including the details of relationship - commercial or otherwise - between the issuer whose securities are being rated / any of its associate of such issuer and the CRA or its subsidiaries. 6.3.3 A CRA shall disclose annually 6.3.3.1 its total receipt from rating services and non-rating services, 6.3.3.2 issuer wise percentage share of non-rating income of the CRA and its subsidiary to the total revenue of the CRA and its subsidiary from that issuer, and 6.3.3.3 names of the rated issuers who along with their associates contribute 10% or more of total revenue of the CRA and its subsidiaries. 6.4 Structured Finance Products 6.4.1 While publishing the ratings of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RA shall disclose its shareholding pattern as prescribed by stock exchanges for a listed company under clause 35 of Listing Agreement. 6.7 Compliance Status of IOSCO Code of Conduct - A CRA shall disclose the compliance status of each provision of IOSCO code of conduct. 7. Implementation Schedule and Reporting The CRAs shall take necessary steps to implement this circular immediately and ensure its full compliance at the latest by June 30, 2010. The half-yearly disclosures stipulated above shall be made by the CRAs within 15 days from the end of the half-year (March / September). The yearly disclosures stipulated above shall be made by the CRAs within 30 days from the end of the financial year. However for the financial year 2009-201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... each credit rating from investment grade to non-investment grade and vice versa Rating Movement from Investment Grade and Non-invetsment Grade between Apr-Sep / Oct - Mar From Investment Grade to Non-investment Grade Sl. No. Name of the Issuer Rating prior to Revision Rating Post Revision 1 2 3 4 From Speculative Grade to Investment Grade Sl. No. Name of the Issuer Rating prior to Revision Rating Post Revision 1 2 3 4 ANNEXURE IV Movement of each credit rating that has moved by more than one notch Rating Movement by more than one-notch between Apr-Sep / Oct - Mar Sl. No. Name of the Issuer Rating prior to Revision Rating Post Revision Notch Difference 1 2 3 4 ANNEXURE V History of credit rating of all out ..... X X X X Extracts X X X X X X X X Extracts X X X X
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