SEBI asks rating agencies to disclose methodology, fees

SEBI said the CRAs will have to ensure full compliance with the guidelines by 30th June and make mandatory disclosures twice annually

Market regulator Securities and Exchange Board of India (SEBI) on Monday asked credit rating agencies (CRAs) to disclose their methodologies and fees charged from the companies they rate, a move that will promote greater transparency, reports PTI.

The disclosure guidelines, issued by SEBI against the backdrop of the recent global financial meltdown, require CRAs to frame policies and a code of conduct to deal with the issues related to conflict of interest between their analysts and entities being rated.

The market watchdog said the CRAs will have to ensure full compliance with the guidelines by 30th June and make mandatory disclosures twice annually.

The role of the rating agencies was questioned during the global financial meltdown, as many companies and their issues collapsed despite enjoying high ratings.

As per SEBI norms, the CRAs will have to maintain records of the important factors underlying the credit rating and a summary of discussions with all the stakeholders involved as well as decisions of the rating committee, including voting details and notes of dissent.

"These records should be maintained till five years after maturity of the instruments and be made available to auditors and regulatory bodies when sought by them," SEBI said in a circular, adding the CRAs will also have to publish information about the historical default rates.

The four major credit rating agencies that operate in the country are CRISIL, Fitch, ICRA and CARE. These agencies, based on the creditworthiness of companies, assign them ratings (like AAA, AA, BBB and so on), which are used by investors, banks and other institutions.

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Investors find Tara Foods IPO difficult to digest

The company has extended the subscription period of its offering till 5 May 2010 and has reduced the price band due to poor response from investors

Tara Health Foods Ltd, which is engaged in producing animal foods and edible oils, has extended the subscription period for its initial public offering (IPO) till 5 May 2010 from the earlier closing day of 30 April 2010 and has revised the price band from Rs180-Rs190 to Rs175-Rs185 due to poor response from investors.
Atherstone Capital Markets Ltd, the lead book-running manager of the issue, said that the subscription period has been extended on the grounds of some ‘technical reasons.’

Overall, the issue has been subscribed 0.03 times so far. Qualified Institutional Buyers (QIBs) have completely avoided the IPO which saw zero bids out of the 35 lakh shares reserved under the category. The Non Institutional Investors’ (NIIs) quota was subscribed 0.02 times while retail investors subscribed just 0.07 times on the closing day of the IPO.

The issue was priced at a price band of Rs180-Rs190 earlier. Tara Foods posted a net profit of Rs16.99 crore for the year ended March 2009. Rating agency Fitch has assigned an ‘IPO Grade 2’ to the issue.

Moneylife had earlier reported on how Tara Foods is not a good investment choice for investors and how QIBs and NIIs have been avoiding companies not having good fundamentals. Read here: (http://www.moneylife.in/article/8/5069.html and here http://www.moneylife.in/article/81/5118.html).

Market watchdog Securities and Exchange Board of India (SEBI) officials did not respond to Moneylife’s query on how such fundamentally poor companies were being given a go-ahead by the regulator.

The company is planning to mop up Rs175 crore-Rs185 crore by issuing 1 crore shares to the public including an anchor investor quota of 15 lakh shares.

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LS passes Bill to hike gratuity ceiling to Rs10 lakh

The Bill seeks to amend the Gratuity Act to enhance the amount of gratuity payable to an employee from Rs3.5 lakh to Rs10 lakh

A Bill to raise the ceiling of gratuity for employees to Rs10 lakh from Rs3.5 lakh was passed by the Lok Sabha without discussion today, reports PTI.

The House, which witnessed an Opposition furore over the “2G spectrum scam” and reports about alleged involvement of a Central minister in an illegal arms deal, also adopted the Employees’ State Insurance (Amendment) Bill 2009 without any debate.

The Payment of Gratuity (Amendment) Bill 2010, introduced by minister of state for labour Harish Rawat last month, was passed by a voice vote.

The Bill seeks to amend the Gratuity Act to enhance the amount of gratuity payable to an employee from Rs3.5 lakh to Rs10 lakh.

The legislation was brought following demands from trade unions and others to remove the ceiling or increase the maximum payable amount, which was fixed in 1997.

The House also passed the Employees’ State Insurance (Amendment) Bill 2009 to provide for medical care to unorganised sector workers, especially those below the poverty line.

The Bill proposes that the Employees’ State Insurance Corporation (ESIC) should participate in the Rashtriya Swasthya Bima Yojana to cover BPL workers in the unorganised sector.

The statement of objects and reasons of the Bill said that it also proposed to increase the age limit of dependents from 18 to 21 years and provide for claims for accidents occurring at work or while going to work.

The legislation was brought to the House in 2008 to replace an ordinance and was then sent to the concerned Parliamentary standing committee.
 

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COMMENTS

anil kumar mathur

7 years ago

Pl. let me know the date of implementation of revision of gratuity for bank officers/employees

sachida nand mamgain

7 years ago

All Bank officers/employees are anxious to know the date of implemention of revision of gratuity ceilings from 3.00 lacs to 10.00 lacs.

sachidanand mamgain

7 years ago

what is the date of implemention of raising of gratuity ceilings from 3.00 lacs to 10.00 lacs

CJG

7 years ago

All we retired Govt. employees of Central PSU's eagerly await the implementation and the disbursement of arrears of Rs.6.5 lakhs gratuity as we have no other source of income since some of us are under the "NO PENSION SCHEME

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