Sebi was fined a penalty of 25 Lakh Rupees on ICRA, CARE, and India Ratings & Research on Thursday. This fine was in connection with the lapses occurring in assigning credit ratings to the non-convertible debentures of ILandFS.
The case was in relation to the default that was committed by ILandFS and IL&FS Financial Services, which is its subsidiary. The IL&FS board was replaced by the government, and the crisis came to light in September last year. Since then, the company and its other related entities have come into strict vigilance.
Sebi said that the default by ILandFS occurred due to the “lethargic indifference and needless procrastination and laxity” of the rating agencies. The case revolves around their obligations that were in respect to the commercial papers (CP), inter-corporate deposits (ICDs), and also interest payments related to non-convertible debentures (NCDs).
Sebi said that IL&FS’ exposure was important at this time for financial stability. This was because IL&S’ share in a total exposure of banks to the NBFC sector was pretty much high. Sebi also added that there was a considerable public interest involved in IL&FS’ affairs considering the importance of it for financial stability.
The regulator of the markets did examine the credit rating agencies (CRAs), which included ICRA Ltd, CARE Ratings Ltd, and India Ratings & Research Pvt Ltd, in assigning a rating to various NCDs of Infrastructure Leasing and Financial Services (IL&FS).
“Further, in the peculiar facts and circumstances of this case, the default has occurred due to lethargic indifference and needless procrastination and laxity of the notice,” the regulator said.
Duly, SEBI has fined Rs 25 lakh each on CARE and ICRA.
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