Securities and Exchange Board of India (SEBI) investigate of the role of ratings agencies including ICRA (Credit Rating Agency of India Limited)and CARE (Credit Analysis & Research) in the Infrastructure Leasing and Financial Services Ltd (IL&FS) crisis.
The Chairman Ajay Tyagi said, adding the regulator has now begun adjudicating proceedings against the agencies.
This (Sebi proceedings) comes after the agencies failed to warn investors in time about the deteriorating credit profile of IL&FS,” said a Sebi official, seeking anonymity.
However, India Ratings & Research, ICRA, and Credit Analysis and Research Ltd (CARE), had given IL&FS the highest rating of AAA, even when its subsidiary, IL&FS Transport Networks, defaulted in June. There was also an abrupt downgrade in the ratings of bonds sold by IL&FS and related entities, after they defaulted on payment obligations in September. Credit rating agencies (CRAs) had downgraded the bonds from high investment grade (AA+ in some cases) to default or junk.