The International Financial Services Centres Authority (IFSCA) on March 16, 2026, has issued a consultation paper on proposed amendments to the CMI Regulations and Master Circular with respect to credit rating agencies. The objective is to improve regulatory clarity and align with global standards.
The background explains that the CMI Regulations govern registration and obligations of CRAs, while the Master Circular consolidates all relevant guidelines. Based on industry representations, amendments are proposed in five key areas: withdrawal of ratings, record keeping, disclosure of private ratings, permissible activities, and dissemination of ratings.
Regarding withdrawal of ratings, the current framework restricts withdrawal to specific situations such as merger, non-cooperation, or issuer request. Stakeholders have suggested making the framework more flexible. In line with global practices recommended by the International Organization of Securities Commissions, it is proposed to make the conditions illustrative rather than exhaustive, allowing CRAs to follow their internal policies while still disclosing reasons publicly.
For record keeping, existing rules require maintaining detailed records, including rating committee minutes. Concerns were raised that recording minutes may expose individual views and affect independence. The proposal is to instead require CRAs to maintain comprehensive records sufficient to reconstruct the rating process, aligning with international standards.
On disclosure of private ratings, current rules mandate certain annual disclosures. However, since private ratings are confidential and meant for limited users, it is proposed that such ratings should be exempt from public disclosure requirements, consistent with global practices.
In terms of permissible activities, although issuer ratings are already allowed under the broader definition, stakeholders requested explicit clarity. Accordingly, it is proposed to clearly include issuer-level ratings as a permitted activity in the Master Circular.
For the dissemination of ratings, the current requirement of obtaining issuer acceptance before publishing ratings has been questioned, as it may compromise independence. The proposal is to remove this requirement and instead allow issuers to review draft ratings only to correct factual errors, ensuring both accuracy and independence.
Finally, the paper invites public comments from stakeholders on these proposals, with submissions to be made by April 5, 2026, in a prescribed format and sent by email to Mr. Rishikesh Wandhekar, AM, IFSCA, at [email protected] with a copy to Mr. Pawan Kumar Chowdhary, DGM, IFSCA, at [email protected] and Mr. Arjun Prasad, GM, IFSCA, at [email protected].
The comment may be provided in the format attached below with the document.
Overall, the proposed amendments aim to shift towards a more principle-based regulatory framework, enhancing flexibility, transparency, and independence of Credit Rating Agencies while aligning with global best practices.
Please refer to the document attached below for more details.
