The Securities and Exchange Board of India is expected to announce a slew of reforms for tighter scrutiny of credit rating agencies and for rewarding informants in insider trading cases at its board meeting today.
Officials told PTI that SEBI’s board is also likely to take up issues relating to mutual funds, startup listing platform and buybacks, among others.
Amid concerns over banks citing ‘client confidentiality’ to resist sharing of information on delayed loan repayments and possible defaults by their borrowers, the market regulator is planning to tighten its norms to make it mandatory for companies to provide these details to credit rating agencies.
Rating agencies have also come under the scanner for failing to flag potential credit risks of the securities and entities rated by them. SEBI may now propose to amend its regulations for rating agencies to ensure that any listed or unlisted entity, before getting rated, gives an explicit consent to obtain from their lenders and other entities full details about their existing and future borrowings as also their repayment and delay or default of any nature and provide the same to the rating agencies.
In another major proposal, SEBI plans to propose that an informant will get up to Rs 1 crore reward, a hotline for sharing details confidentially, and a possible amnesty or settlement for minor wrongdoings in return for cooperation in the probe.
