Functioning of Rating Committee Composition, Process, Responsibilities & Evaluation
Updated As On: 18 September 2018 

Definition of Rating Committee

Regulation 2(1)(r) of the Securities and Exchange Board of India (Credit Rating Agencies) Regulations, 1999 defines a rating committee as follows:

 

'Rating Committee' means a committee constituted by a credit rating agency to assign rating to a security.
As per Acuité's credit rating process, a 'Rating Committee' assigns the credit rating at a meeting after duly considering all information, analysis and views presented by the rating analyst through a 'Rating Note'.

Constitution

  1. A rating committee will comprise of five members including a chairperson. A committee may comprise of only internal committee members, or if necessary, may include external members. A list of members of the committees along with guidelines for its composition is given in Annexure I. The composition of the Rating Committee may change at any point of time at Acuité's discretion.
  2. The quorum for the meeting will be three members, including the chairperson.

Qualification of Rating Committee Members

  • Internal Committee members:
    • Educational qualification: CA/ CFA / MBA / MMS / PGDBA / Cost Accounting / CAIIB / FRM/ MA (Econ.)/ M. Com./ M. Sc./ Ph. D/ Post Doctorate
    • Experience: A minimum post-qualification professional experience of 5 years, including 2 years of experience in a Credit Rating Agency/ Banks/ NBFCs/ Mutual Fund / Credit Research Firm / Bi-lateral Government Agency
  • External Committee members:
    • Educational qualification: CA/ CFA / MBA / MMS / PGDBA / Cost Accounting / CAIIB / FRM/ MA (Econ.)/ M. Com./ M. Sc./ Ph. D/ Post Doctorate
    • Experience: Ex-Bankers / Professionals with Rating Agency experience.

Duties & Responsibilities

The Rating Committee shall deliberate on the rating notes submitted, hear the presentation of the rating analyst on the case and then assign the rating in line with the rating criteria / methodology of Acuité and the internal policies governing rating, by way of majority opinion of the Rating Committee members.

General Guidelines

  1. Rating committee members will maintain independence and ensure that they do not let business considerations, political views or personal biases impact the individual rating decision. Fees paid by the client should not be disclosed to the rating committee members. Social status of the promoters/directors, the quantum of the debt programme should also not influence the rating decision.
  2. Clients will not represent their case directly to the committee or individual committee members.
  3. Committee members will immediately report to the Compliance Officer of any attempt by intermediaries, brokers, clients or anyone else to influence the rating by any means that may compromise the unbiased nature of the rating.
  4. Committee members will keep themselves aware and updated of the rating criteria and methodologies (and the changes therein) and act in accordance with the same.
  5. Committee members will not provide any advance indication of the rating to anyone in any form; they will only take a collective decision through voting.
  6. System of Voting and recording of Dissent: 
    • The rating committee decision will be based on the majority vote and in case of a tie, the chairperson will have the casting vote. 
    • Note of dissent, if any, by any member of the rating committee shall be taken on record.
  7. Committee members will be bound by Acuité's internal Code of Conduct and Non-Disclosure Agreement (for external members) and shall always protect the confidentiality of information obtained from clients, internal analytical notes, discussions / deliberations.
  8. Conflict of interest: 
    For a Rating Committee member, conflict of interest can arise under one or more of the following circumstances:
    1. Investment in securities issued by the entity being rated (including self, spouse, children and dependents)
    2. Business dealings OR any form of pecuniary relationship with the entity being rated (including self, spouse, children and dependents)
    3. Directorship / Employment (whole-time or part-time) with the entity being rated (including self, spouse, children and dependents)

    In case, there exists conflict of interest with reference to any case/s, forming part of the above agenda, the Rating Committee member(s) is/ are advised to recuse oneself from participating in the discussions and voting on the relevant case/s.

  9. A designated officer will arrange the committees, set the agenda, circulate the agenda along with rating notes and coordinate logistics (make arrangements for voice/video conferencing, send intimation to members). The same officer will also note the minutes of the proceedings, record the ratings assigned, keep signed records of such minutes and send updates to concerned teams (Finance, Operations) on the ratings assigned. The responsibilities of the Rating Administration team will be to ensure smooth operation of the committees and adherence to the following:
    • Generally, issue notice of RCM along with the list of cases to be presented to the committee 1 working day in advance.
    • Ensure despatch of rating notes to the committee members within the prescribed time limit (generally 48 hours in advance, but at least 24 hours in advance) prior to the committee meetings.
    • Maintain list of attendees of the rating committee
    • Announcing each case before it is presented.
    • Taking note of the committee's final rating decision on each case.
    • Taking notes and tracking action on clarifications sought/action points specified by the committee.
    • Maintaining approved minutes duly signed by the Chairperson of the rating committee meetings. The minutes shall contain the details as given in Annexure II.
    • Ensuring that each meeting is assigned a serial number for easy future reference.
    • Collecting rating notes back from individual members after the committee decision.
    • Ensuring that hard copies of exhibits and rating notes are appropriately and securely destroyed after the meeting.
  10. Expert Opinion:
    • Chairperson of the committee may invite expert opinion from Acuité's panel of experts, should the need arise.
    • Such experts will not have voting rights in the committee.
    • Expert panellists will also be bound by confidentiality agreement and prevention of conflict of interest obligations.
  11. Any non-ratings member shall take prior approval from the VP – Centre of Excellence/Compliance Officer for attending the RCM in listen-only mode.
  12. Committee members and analysts may join the meeting through video or voice conference facility.
  13. The bridge telephone number for conference, if any, should be secure and the password/PIN should be changed periodically.
  14. Members of Business Development Team or Support Team will not attend the committee meetings except for training purposes through voice conferencing in 'listen-only' mode, in which case prior approval should be sought from VP – Centre of Excellence/Compliance Officer.
  15. The Chairperson of the Rating Committee shall be responsible for orderly conduct of meeting in line with these guidelines.
  16. The Chairperson of each of the Rating Committees shall on an annual basis undertake a review of the decisions taken by their respective committees in that financial year which would inter alia include:
    • Ratings assigned by the rating committee including ratings assigned based on best available information in cases of non-cooperation by the issuer / rated entity.
    • Sharp changes in ratings.   

    The review report as above shall be placed before the Board of Directors of Acuité.

Professional Conduct

The members of the committee (including expert panellists) will maintain decorum and conduct themselves professionally. This implies that:

  • Use of foul language, show of temper or display of power or position should be avoided.
  • Mutual respect for each other irrespective of age, seniority and designation will have to be observed.
  • The rating recommendation/decision taken by a committee member should not be quoted outside the committee.

Annexure I

LIST OF COMMITTEE MEMBERS AND GUIDELINES FOR ITS CONSTITUTION

The following is the list of Committee members:


RATING COMMITTEE MEMBERS
1. Antony Jose
2. Aditya Gupta
3. Manish Saraf
4. Sri Hari Adari
5. Pooja Ghosh
6. A J Bose
7. Vasant G Kamath
8. Asit Pal
9. Sachin Mathur
10. Vinayak Nayak

11. Anil Patwardhan 

Annexure II

The minutes of the rating committee meetings shall contain the following:

  • Preliminary Information

    • Date of the RCM
    • Names of all the persons attending the RCM
    • Name of rating committee members present (only rating committee members will have voting rights)
    • Name of the Chairperson of the meeting
    • Any other special invitees (if any)

  • Information Relating to Rating Decision

  • Following information/ details of each rating decision shall be captured:

    • Name of the rated issuer/entity
    • Rating exercise i.e. whether it's a fresh rating or review/ surveillance case
    • Rating outcome i.e. rating assigned, along with rating outlook and special rating symbol, if any.
    • Summary of key issues discussed during the rating committee.
    • Note of Dissent (if any) by any RCM member

  • Authentication and Maintenance of Rating Committee Summary

    • The summary of the RCM shall be approved/ signed by the Chairperson either manually or digitally.
    • The approved/ signed summary shall be maintained either manually or electronically.
7,835
Companies rated since 2012
Search Live Ratings
Apply For Rating
Our exciting journey started in 2005 with rating of bank borrowers most of whom were small and medium enterprises. At that time, credit rating was a concept known only to large issuers of capital market instruments. Since then, like a caterpillar transforms itself into a beautiful butterfly, we transformed to rate bonds, bank facilities of large corporates and issuers across industries. Along came many achievements - SEBI Registration in 2011, RBI accreditation in 2012, 50,000 ratings in 2018, 5,000 Bond and Bank Loan Ratings in 2017, launch of India's first Android and iPhone app to disseminate rating, tamper-proof QR-code-enabled rating rationales, and SMERA Terminal to name a few.

Now is the time to re-emphasize our increasing footprint across all segments of ratings through the launch of our new name - 'Acuité'.

The name has changed. The spirit of upholding highest standards of analytical rigour, continuous improvement, excellence in our processes and quest for innovation remains the same. We would like to re-emphasize that we will continue to work hard to provide independent, unbiased and timely opinion of highest standard.

Acuité means 'sharpness and clarity of thought and vision'. Let our research and ratings help you take decisions with confidence.


Sankar Chakraborti
CEO