The regulator cited failure on the part of the rating agency to “exercise due skill, care and diligence in the discharge of its duties as a credit rating agency”.
The regulator cited failure on the part of the rating agency to “exercise due skill, care and diligence in the discharge of its duties as a credit rating agency”.
Markets regulator Sebi has issued an order to Brickwork Ratings to shut down its operations within six months after the regulator said there were major lapses in the duties of the rating agency during its inspection.
In its order, the Securities and Exchange Board of India cited failure on the part of the rating agency to “exercise reasonable skill, care and diligence in the discharge of its duties as a credit rating agency”.
It was also mentioned that there were lapses in the case of Bhushan Steel and Gayatri projects. Brickwork is one of the seven SEBI-registered credit rating agencies. According to the company’s website, Brickwork Ratings is the promoter and strategic partner of Canara Bank.
SEBI initiated the investigation of the credit rating agency in 2020 and conducted a joint inspection with the Reserve Bank of India. Credit rating agencies are institutions that rate the debt instruments of companies. These ratings are used by investors and companies to make business decisions on a particular corporate. “Given the significant public functions undertaken by credit rating agencies, it becomes important to ensure that such agencies conform to the applicable regulatory framework and have high standards of diligence. SEBI regulations and circulars for credit rating agencies It is mandated to give ‘true’, ‘fair’, ‘appropriate’, and ‘accurate’ ratings, and high standards of due diligence, integrity, dignity, fairness, etc. are expected from the CRA in order to fulfill such obligations. Aswini Bhatia, Whole Time Member, SEBI said, in order.
They also said, “It is evident that Brickwork failed to exercise due skill, care and diligence in the discharge of its duties as a credit rating agency, which has served the core purpose of the regulations, i.e. investor protection and orderly regulation of securities markets.” Development was defeated.”
In January 2020, SEBI and RBI conducted a joint inspection of the rating agency, where both the regulators found “several irregularities”. SEBI issued an administrative alert and directed it to rectify the discrepancies and take corrective measures.
In July 2021, SEBI was served a notice by the Karnataka High Court, where Brickworks challenged the recommendation to cancel its licence.