INTRODUCTION

SEBI vide its circular SEBI/HO/MIRSD/MIRSD4/CIR/P/2016/119 directed all Credit Rating Agencies to disclose their operating policies and guidelines. This document outlines the relevant policies, guidelines, rating process and criteria applicable to all rating assignments that fall within the purview of SEBI Regulations and Circulars (executed by Acuité Bond Ratings division).

Any rating product or service that meets all the three conditions mentioned below shall come under the purview of these guidelines:

• Ratings on public issues and right issue of securities (SEBI CRA Regulation,1999 ), other securities / instruments and loans / facilities provided by banks (SEBI circular, 2012)
• Ratings assigned using a symbol standardized by SEBI (SEBI circular 2011)
• Ratings assigned through a rating agreement entered into with the issuer (SEBI CRA Regulation,1999 )

In addition Issuer Ratings, will also be subject to these guidelines.

POLICIES & GUIDELINES GOVERNING RATING PROCESS

 

Acuité follows stringent policies and guidelines to ensure independence, quality, timeliness and objectivity in assigning ratings that are unbiased.

• General Nature of Compensation Arrangements with Rated Entities
• Policy for Appeal by Issuers against the Rating being assigned to its Instruments
• Policy for Placing Ratings on Credit Watch
• Guidelines on What Constitutes Non-Cooperation
• Policy for Withdrawal of Ratings
• Gift Policy
• Confidentiality Policy
• Policy on Outsourcing of Activities
• Policy on Provisional Ratings
• FAQs on Ratings
• Disclosure on Managing Conflict of Interest
• Rating Process and Timeline
• Policy regarding Monitoring and Review of Ratings
• Rating Committee Composition, Responsibilities and Evaluation Criteria
• Guidelines on Minimum InformationRequired for Rating
• Guidelines on Seeking Information from External Entities
• Policy on Internal Approvals
• Role and Accountability of Rating Analysts

RATING CRITERIA

Acuité has well defined rating criteria and methodologies, models that form the analytical basis for all the ratings assigned. The rating criteria and methodologies are approved by the Rating Criteria Committee and is reviewed every year. These criteria help the analyst to ensure that all ratings can be benchmarked against a common reference.

• Criteria for Rating of Manufacturing Entities
• Criteria for Rating of Trading Entities
• Criteria for Rating of Entities in Services Sector
• Criteria for Rating of Non-Banking Financing Entities
• Criteria for Rating of Banks and Financial Institutions
• Criteria for Rating of Entities in Infrastructure Sector
• Criteria for Default Recognition
• Application of Financial Ratios and Adjustments
• Criteria for Consolidation of Companies
• Criteria for Group and Parent Support
• Criteria for State Government Support
• Criteria for Rating of Securitized Transactions
• Criteria for Rating Commercial Paper
• Criteria for Fixed Deposit Ratings
• Complexity Levels of instruments

APPLICABLE REGULATORY GUIDELINES

https://www.sebi.gov.in/cms/sebi_data/attachdocs/1331706378217.pdf

https://www.sebi.gov.in/cms/sebi_data/attachdocs/1308551826775.pdf

https://www.sebi.gov.in/cms/sebi_data/attachdocs/1363346395331.pdf

https://www.sebi.gov.in/cms/sebi_data/attachdocs/1477999985100.pdf

• SEBI Regulations, 1999 https://www.sebi.gov.in/sebiweb/home/document_detail.jsp?link=https://www.sebi.gov.in/cms/sebi_data/docfiles/19524_t.html
• Coverage of other securities / instruments and loans / facilities provided by banks under purview of SEBI, 01-Mar-2012 
• Standardization of Rating Symbols & Definitions, 15-Jun-2011
• Sharing of information regarding issuer companies between Debenture Trustees and Credit Rating Agencies, 15-Mar-2013
• Enhanced Standard for Credit Rating Agencies, 01-Nov-2016