Panel for more disclosures by rating agencies

NEW DELHI: Credit rating agencies may be required to disclose their earnings from the rating services provided to companies as well as non-rating businesses, if the recommendations of a high-level committee, set up by the financial sector regulators, go through.

The committee, in its report on ’Comprehensive Regulation for Credit Rating Agencies’ said,"there may be greater disclosures regarding materially significant revenues received from a particular issuer and non-rating business like advisory services."

The committee was set up by a coordinating body between the Sebi, RBI, PFRDA and IRDA, as the role of credit rating agencies has come under sharp criticism for fuelling the still lingering global financial crisis and the resultant recession. The committee, comprising officials from the Finance Ministry and these regulators, also added that rating agencies "should not be allowed to enter into any business that may directly or indirectly have conflicts of interest with their basic job of rating."

"The committee took note of international action in this regard and recommend greater disclosures regarding materially significant revenues received from a particular issuer and non-rating business like advisory services ," the report said. However, it added that there is no immediate concern over the operations of rating agencies in the country, even in the context of the recent financial crisis.

There are five credit rating agencies currently operating in the country which are registered with the market regulator Sebi. The agecies are Crisil, ICRA, Fitch India, CARE and Brickworks.