The Securities and Exchange Board of India vide its notification dated 27th April 2021 has issued a new framework to strengthen policies on provisional rating by credit rating agencies (CRAs) for debt instruments.
Under this framework, all provisional ratings (‘long term’ or ‘short term’) for debt instruments shall prefixed as ‘provisional’ before the rating symbol in all communications viz. rating letter, press release and rating rationale etc.
The provisional rating shall be converted into a final rating within 90 days from the date of issuance of the debt instrument. The final rating assigned after end of 90 days shall be consistent with the available documents or completed steps, as applicable.
An extension of 90 days may be granted on a case-to-case basis by theCRA’s rating committee(s), in accordance with the policy framed by the credit rating agency in this regard.
Further no CRA shall assign any provisional rating to a debt instrument upon the expiry of 180 days from the date of its issuance.
