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Consultation paper on proposed Amendments in CMI Regulations and Master
Circular with respect to Credit Rating Agencies
A. Objective of the Consultation paper
The objective of this consultation paper is to seek comments from the public on the
proposal for amendments in International Financial Services Centres Authority
(Capital Market Intermediaries) Regulations, 2024 (“CMI Regulations”) and Master
Circular pertaining to Credit Rating Agencies.
B. Background and proposal
1. CMI Regulations provide provisions related to registration of several capital market
intermediaries including Credit Rating Agencies. The CMI Regulations also provide
for general and specific obligations and responsibilities to be complied by the capital
market Intermediaries registered with IFSCA.
2. Regulation 28 of the CMI Regulations provides for specific obligations and
responsibilities of Credit Rating Agencies registered with IFSCA.
3. Further, IFSCA has also issued Master Circular for Credit Rating Agencies on August
05, 2025, in order to enable the stakeholders to have access to various requirements
including instructions or directions issued under CMI Regulations at one place.
4. IFSCA is in receipt of representations for amendments in respect of the following
matters pertaining to Credit Rating Agencies:
4.1. Withdrawal of Ratings
4.2. Record Keeping by CRAs
4.3. Disclosure of Private Ratings
1 | Page4.4. Permissible activities for CRA
4.5. Dissemination of Ratings
The proposals, representation received along with extant regulatory framework on the
above matters are discussed in detail in the ensuing paragraphs:
A. Withdrawal of Ratings
1. Background
CMI Regulations and the Master Circular for CRAs provide provisions related to
withdrawal of rating assigned by them during the tenure of the instrument.
2. Extant Regulatory Framework
2.1. Regulation 28(5) of the CMI Regulations mandates that a registered credit
rating agency shall generally not withdraw a rating so long as the obligations
under the security/ instrument/ facility rated by it are outstanding.
2.2. Further the CMI regulations also provides the list of situations under which the
rating can be withdrawn provided that the reason for withdrawal of rating is
mentioned in the press release issued by the registered credit rating agency
withdrawing such rating:
(a) Where the entity whose security/instrument/facility is rated is wound up
or merged or amalgamated with another entity,
(b) In case of non-cooperation from the issuers, or non-payment of agreed
fee,
(c) At the request of an issuer, except where such request might give rise to
avoiding an imminent rating change, or
(d) Where such credit rating agency is constrained from providing service
due to events beyond its control:
2 | Page2.3. Para 18.4. of the Master Circular for Credit Rating Agencies mandates that the
CRA shall establish a policy on withdrawal of ratings and the same shall be
prominently disclosed on its website.
3. Representation received
3.1. IFSCA is in receipt of a representation wherein it has been stated that the
reasons for withdrawal of a rating should not be restricted to specific situations;
instead, they should be principle-based, considering the evolving nature of the
market and the best practices in other global markets.
3.2. While the Regulations begin with a general, overarching clause, the succeeding
provisions make the framework restrictive and rule-based rather than principle-
based.
4. Global regulatory framework
4.1. Paragraph 1.17 of the Code of Conduct Fundamentals for CRAs issued by
IOSCO in 2008 (revised in March 2015)1 provides that CRA should establish,
maintain, document, and enforce policies and procedures that clearly set forth
guidelines for disseminating credit ratings that are the result or subject of credit
rating actions and the related reports, and for when a credit rating will be
withdrawn.
4.2. Further para 3.5 of the Code of Conduct Fundamentals for CRAs issued by
IOSCO in 2008 (revised in March 2015)2 provides that CRA should disclose its
1 https://www.iosco.org/library/pubdocs/pdf/IOSCOPD482.pdf
2 https://www.iosco.org/library/pubdocs/pdf/IOSCOPD482.pdf
3 | Pagepolicies and procedures for distributing credit ratings and reports, and for when
a credit rating will be withdrawn.
5. Proposal
5.1. In view of the above, it is proposed that Regulation 28(5) be modified to clarify
that the situations enumerated in the provision are illustrative rather than
exhaustive.
5.2. Accordingly, Regulation 28(5) of CMI Regulations is proposed to be modified as
under:
“(5) A registered credit rating agency shall generally not withdraw a rating so
long as the obligations under the security /instrument/ facility rated by it are
outstanding:
Provided that a registered credit rating agency may withdraw a rating in certain
situations as per the approved policy of the registered credit rating
agency including the following situations:
(a) Where the entity whose security/instrument/facility is rated is wound up or
merged or amalgamated with another entity,
(b) In case of non-cooperation from the issuers, or non-payment of agreed fee,
(c) At the request of an issuer, except where such request might give rise to
avoiding an imminent rating change, or
(d) Where such credit rating agency is constrained from providing service due
to events beyond its control:
Provided further that the reason for withdrawal of rating shall be mentioned in
the press release issued by the registered credit rating agency withdrawing
such rating.”
4 | PageB. Record Keeping by CRAs
1. Extant Regulatory Framework
Para 13.1.10 of the Master Circular for Credit Rating Agencies mandates CRAs to
maintain information and records supporting each credit rating including the decisions
and the minutes of the rating committee. Para 13.1.10 of the Master Circular for CRA
reads as under:
“The CRA shall maintain information and records supporting each credit rating and
review in electronic retrieval form for a period (as mentioned in the CMI Regulations)
from the date rating is withdrawn or discontinued, including the following information/
records:
13.1.10.1. The important factors underlying the credit rating;
13.1.10.2. Decisions and minutes of the rating committee.”
2. Representation received
IFSCA is in receipt of representation that recording minutes of the rating committee
could reveal how individual committee members voted to anyone with subsequent
access (e.g., for rating reviews or future rating studies), potentially creating conflicts
of interest and undue influence in what should remain an independent process.
Hence, in order to ensure sufficient records and information with the CRAs, the
clarification may be provided that the objective of Para 13.1.10.2 is to ensure that
CRAs maintain comprehensive internal records sufficient to reconstruct the rating
process, and that the same can be achieved through robust documentation practices.
3. Global regulatory framework
3.1. Para 1.9 of the IOSCO CRA Code issued in March 2015 requires that CRA
should maintain internal records that are accurate and sufficiently detailed and
5 | Pagecomprehensive to reconstruct the credit rating process for a given credit rating
action.
3.2. Para 2.6 of the Code of Conduct for CRAs issued by Monetary Authority of
Singapore3 mandates CRA to maintain records to support every credit rating
that it issues for not less than 6 years from the issue date of the relevant credit
rating.
4. Proposal
4.1. In view of the above, it is proposed that the para 13.1.10. of the Master Circular
for CRA be modified as under:
“The CRA shall maintain information and records that are accurate and
sufficiently detailed and comprehensive to reconstruct the credit rating
process for a given credit rating action including the important factors
underlying the credit rating, retrieval in electronic form for a period as
mentioned in the CMI Regulations from the date rating is withdrawn or
discontinued.”
C. Disclosure of Private Ratings
1. Extant Regulatory framework
Para 25 of the Master Circular for Credit Rating Agencies dated August 05, 2025
requires CRA to make following disclosures on its website at the end of the financial
year:
1.1. The list of defaults separately for each rating category
1.2. Computation and disclosure of Default Rates
3 https://www.mas.gov.sg/-/media/mas/about-mas/code-of-conduct-for-credit-rating-agencies--
8oct2018.pdf
6 | Page1.3. Disclosure of Average Rating Transition Rates for long-term
securities/instruments/facilities/issuances.
Explanation: The disclosure of Average Rating Transition Rates shall be
applicable after 5 years from the commencement of operations of the CRA.”
2. Representation received
IFSCA is in receipt of representation from market participants suggesting that the
periodic disclosures made by the Credit rating agencies should not include disclosure
of private ratings as private ratings are for exclusive person and not for public
disclosure.
3. Global regulatory framework:
3.1. IOSCO in its Final report – Other CRA products issued in October 2017
mentioned private ratings as the rating which are generally made available only
to a restricted and controlled number of recipients.4
3.2. Code of Conduct for Credit Rating Agencies issued by Monetary Authority of
Singapore5 mandates CRA that Except for private credit ratings prepared
pursuant to an individual order which is intended to be provided exclusively to
the person who placed the order and not intended for public disclosure or
distribution by subscription, a CRA should disclose any credit rating, as well as
any decision to discontinue a credit rating, on a non-selective basis and in a
timely manner.
4 https://www.iosco.org/library/pubdocs/pdf/IOSCOPD582.pdf
5 https://www.mas.gov.sg/-/media/mas/about-mas/code-of-conduct-for-credit-rating-agencies--
8oct2018.pdf
7 | Page4. Proposal
4.1. It is noted that the Private ratings by definition are confidential credit
assessments provided by rating agencies exclusively to a specific issuer or
investor and not for disclosure in public.
4.2. Considering the above and global best practices, it is proposed that the master
Circular for CRA be amended to provide that the disclosure of private ratings is
not mandatory.
4.3. Para 25 of the Master Circular for CRA is proposed to be modified as under:
“25. Periodic Disclosures
25.1. The CRA shall make the following disclosures on its website at the end
of each financial year:
25.1.1. the list of defaults separately for each rating category
25.1.1. computation and disclosure of Default Rates
25.1.2. disclosure of Average Rating Transition Rates for long-term
securities /Instruments /Facilities /Issuances:
Explanation: The disclosure of Average Rating Transition Rates shall be
applicable after 5 years from the commencement of operations of the
CRA.
Provided that the above requirement relating to disclosure on website shall not
be mandatory for private credit rating assignments.”
8 | PageD. Permissible activities for CRA
1. Extant Regulatory Framework
1.1. As per regulation 3(1)(l) of the CMI Regulations, “credit rating agency” has
been defined as under:
“credit rating agency” means a person which is primarily engaged in rating
of securities, financial products, issuers or sovereigns.
1.2. Para 5 of Chapter III of the Master Circular for CRA provides list of
permissible activities for CRA registered with IFSCA, which permits
following activities:
1.2.1. Credit ratings
Explanation 1: Credit ratings can be of any financial product
or financial instrument in the IFSC or any Foreign Jurisdiction
based on global scale (foreign currency or local currency)
ratings.
Explanation 2: Credit ratings shall include private ratings.
1.2.2. Sovereign Ratings
1.2.3. Valuation Services
1.2.4. Research
1.2.5. Rating Assessment / Evaluation Services
1.2.6. Monitoring Agency
9 | Page2. Representation received
IFSCA is in receipt of representation to include issuer level rating as the
permissible activities for Credit Rating Agencies, registered with IFSCA since it
forms as an important part of the rating product suite and is closely linked to, but
distinct form, instrument specific ratings.
3. Proposal
While the CMI Regulations already permit issuer rating, however for abundant
clarity, it is proposed to specifically include issuer rating as permissible activities
provided under para 5.1 of the Master Circular. Accordingly, Para 5.1. of the
Master Circular for CRA is proposed to be modified as under:
“5.1. A Credit Rating Agency registered with the Authority (“the CRA”) under the
CMI Regulations is permitted to carry out the following activities:
5.1.1. Credit ratings
Explanation 1: Credit ratings can be of any financial product or financial
instrument, issuer in the IFSC or any Foreign Jurisdiction based on global
scale (foreign currency or local currency) ratings.
Explanation 2: Credit ratings shall include private ratings.
5.1.2. Sovereign Ratings
5.1.3. Valuation Services
5.1.4. Research
5.1.5. Rating Assessment / Evaluation Services
5.1.6. Monitoring Agency”
10 | PageE. Dissemination of Ratings
1. Background
Master Circular for CRAs requires issuer acceptance prior to publication of initial
rating assessment.
2. Extant Regulatory Framework
Para 17 of the Master Circular for CRAs mandates that all rating actions on initial
credit ratings assignments, once accepted by issuer, shall be disseminated by the
CRA on its website along with the rating rationale. Further, it is also mandated that
all subsequent rating actions on accepted ratings shall be disseminated by CRA
on its website along with the rating rationale.
3. Representation received
3.1. IFSCA is in receipt of a representation that seeking issuer acceptance for
publication of rating assigned to the issuer may amount to question the role
as CRA being independent and free from issuer influence.
3.2. Hence, it is proposed that the CRA may be mandated to share draft press
release prepared by CRAs to the issuer prior to issuance, for factual
accuracy, instead of seeking acceptance from issuer on assigned rating.
4. Global Regulatory Framework
4.1. Para 3.9 of the Code of Conduct Fundamentals for CRAs issued by IOSCO
in 2008 (revised in March 2015)6 provides that where feasible and
appropriate, a CRA should inform the rated entity, or the obligor or arranger
of the rated obligation about the critical information and principal
6 https://www.iosco.org/library/pubdocs/pdf/IOSCOPD482.pdf
11 | Pageconsiderations upon which a credit rating will be based prior to
disseminating a credit rating that is the result or subject of the credit rating
action and afford such rated entity, obligor, or arranger an adequate
opportunity to clarify any factual errors, factual omissions, or factual
misperceptions that would have a material effect on the credit rating. The
CRA should duly evaluate any response from such rated entity, obligor, or
arranger. Where in particular circumstances the CRA has not informed
such rated entity, obligor, or arranger prior to disseminating a credit rating
action, the CRA should inform such rated entity, obligor, or arranger as soon
as practical thereafter and, generally, should explain why the CRA did not
inform such rated entity, obligor, or arranger prior to disseminating the
credit rating action.
4.2. Para 8.13 of the Code of Conduct for CRAs issued by Monetary Authority
of Singapore mandates that where feasible and appropriate, prior to issuing
or revising a credit rating, the CRA should inform the issuer of capital
markets products of the critical information and principal considerations
upon which a credit rating will be based and afford the issuer an opportunity
to clarify any likely factual misperceptions or other matters that the CRA
would wish to be made aware of in order to produce an accurate credit
rating. A CRA should duly evaluate the response. Where in particular
circumstances the CRA has not informed the issuer prior to issuing or
revising a rating, the CRA should inform the issuer as soon as practical
thereafter and, generally, should explain the reason for the delay
12 | Page5. Proposal
5.1. In line with Code of Conduct for CRAs issued by IOSCO, it is proposed to
remove the requirement of acceptance of rating by the issuer but provide
issuer with an opportunity to verify factual information basis which the
ratings has been assigned.
5.2. In view of the above proposal, it is proposed that Para 17 of Master Circular
for CRAs be amended as under:
“17. Dissemination of Ratings
17.1. All the rating actions on initial rating assignments and subsequent
rating actions shall be disseminated by the CRA on its website along with
the rating rationale. The CRA shall prior to issuance of rating actions,
afford the issuer of critical information and principal considerations
upon which a credit rating will be based prior to disseminating a credit
rating that is the result or subject of the credit rating action and afford
such issuer an adequate opportunity to clarify any factual errors,
factual omissions, or factual misperceptions that would have a
material effect on the credit rating.
Provided that the said requirements shall not be mandatory for unsolicited
ratings and private credit rating assignments
17.2. Where the rated instruments are listed on a recognised stock
exchange in the IFSC, the CRA shall disclose the ratings to the stock
exchange(s) in accordance with the requirements specified under
regulation 28(6) of the CMI Regulations.”
13 | PageF. Proposal for Public Comments
1. Comments and suggestions from the public and stakeholders are invited on the
proposals and proposed amendment in the consultation paper.
2. Comments on the consultation paper may be sent by email to Mr. Rishikesh
Wandhekar, AM, IFSCA at rishikesh.wandhekar@ifsca.gov.in with a copy to Mr.
Pawan Kumar Chowdhary, DGM, IFSCA at pawan.kc@ifsca.gov.in and Mr. Arjun
Prasad, GM, IFSCA at arjun.pd@ifsca.gov.in latest by April 05, 2026.
3. The comments may be provided in the following format (MS Word or MS Excel only):
Name and Details of the Person / Entity
[Organization name (if applicable), Contact No., Email address]
Paragraph Comments/Suggestions Detailed rationale along
Sr. No No. of the along with revised Clause with supporting
Consultation in line with the suggestion information
paper
Issued on March 16, 2026
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