In a first such punitive regulatory action, Sebi last month cancelled Brickwork Ratings’ licence for its failure to exercise proper skill, care and diligence while discharging its duties as a credit rating agency.
The regulator had directed Brickwork Ratings to wind down its operations within six months and also barred it from adding any new clients from the date of the order. Brickwork Ratings has got an interim stay from the Securities Appellate Tribunal on the Sebi order.
An unprecedented directive like cancellation of the rating licence is unheard of – both in India and overseas,” Kulkarni told ET. “There isn’t a single case of a credit rating agency getting its licence cancelled anywhere in the world. Even during the sub-prime crisis in the US that resulted in a global recession, where all the three major credit rating agencies played pivotal roles in the mortgage crisis, their licences were not cancelled,” said Kulkarni, a former IT secretary with the Karnataka government.
Sebi said repeated lapses noticed across multiple inspections conducted by it shows that governance changes recommended in earlier inspections and monetary penalties imposed have not proved effective or deterred Brickwork Ratings in addressing very basic requirements of running a credit rating agency.
