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Regulations of Credit Rating Industry in India

In India, CRAs are regulated by the Securities Exchange Board of India SEBI. SEBI was one of the first regulators globally, to put forth a comprehensive framework for the regulation of CRAs through the SEBI (Credit Rating Agencies) Regulations, 1999 (‘CRA Regulations’).

 

Source – ZebraResearch

Currently, SEBI only regulates  the rating of debt securities. However, CRAs rate a vast variety of instruments, including bank loans, overdraft facilities, letters of credit. These other rating activities remain unregulated.

 

 

Comparative perspective of regulations –

Extract Source – Asian Bond market, Page no – 25

 

 

Extract Source – CRISIL IP, Page no – 26

 

Extract Source – Indian Bond Market By CARE Ratings, Page no – 31

 

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Growth Factors of Exchange Industry in India

Factors that indicate a healthy growth in the Exchange industry are
1. Increase in number of listed companies
2. Shift from physical assets to financial assets (eg. mutual funds)
3. Increase retail participation
4. Govt approval for EPFO to invest in equity market
5. Growth of data related business
6. Development of corporate bond market
7. Development of International Exchange

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