India’s markets regulator on Wednesday allowed credit rating agencies to obtain details of clients’ existing and future debt, in a bid to help them identify defaults in a timely way, amid a severe credit crunch and a slowdown in the economy.
The Securities and Exchange Board of India (SEBI) said it enabled rating agencies to get ‘explicit consent’ from clients in rating agreements to secure details on debt repayments and any delays or defaults from lenders or other organisations.
SEBI has cracked down on such agencies in the past few years, following a series of sudden downgrades and withdrawals of ratings and for failing to identify potential defaults in time.
But rating agencies have often cited the lack of information shared by companies as a reason for their delayed response.
The regulator has also been tightening disclosure regulations to boost transparency, monitoring and accountability of rating agencies.
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