Several Founders, Co-Founders, CXO Bankers, CXO Fintech professionals & people who participated in the ePanel discussions are:
- Dr. R Bhaskaran, Former Chief Executive Officer, IIBF
- Mr. Avro Mukerji, Investment Counselor- NRI Burgundy, Axis Bank
- Mr. Rahul Dayal, Former Senior Vice President & Head-Business Solutions Group Liabilities, cards & BI, RBL Bank
- Mr. P B Prakash, Head-Financial Institutions Group, Indusind Bank
- Mr. Sridhar R, former President & Credit Risk Officer, Lakshmi Vilas Bank
- Mr. Vikas R Panditrao, Co-Founder, Forum of Industry and Academic Knowledge Sharing (FIAKS)
- Many other CEO/CXO Bankers & Fintech professionals on FIAKS Forum requested to remain anonymous
Credit Rating Agencies (CRA’s) have been around globally since the early 1900s and few of the first being Moody’s, Standard & Poor’s (S&P) headquartered in the US and Fitch group that has its headquarters in the US as well in the UK. They’re also known as the Big 3 CRA’s. However, in India, credit rating agencies emerged in the late 1900s. CRISIL is India’s first rating agency was launched in 1987 followed by ICRA in 1991 and CARE in 1993. Credit Rating Agencies in simple terms are those agencies that rate the level of risk that a bond holds, as the name suggests they rate the debtor’s ability to pay back the loans/bonds that they have issued. These agencies rate different kinds of bonds like corporate bonds, government bonds/debentures, they also rate bank loans and other fixed-income securities and debt instruments. In India CRA’s are regulated by both SEBI as well as RBI, they’re regulated by RBI because they rate bank loans too which contribute to nearly 70% of their income. Many of our community members have poured in their views related to the role of credit rating agencies in India and the current downfalls that have occurred in the market due to the failure of these ratings. Rating Agencies don’t seem up to the mark, they downgrade come after the entire world becomes aware of the issues, IL&FS was a classic example, followed by DHFL. The regulatory body for Rating Agencies should be really strong these days due to the many scams taking place. This is was also the case in subprime in the US where the CRA’s did not downgrade ratings which in turn led to people still believing and investing in those funds. A similar situation seems to be occurring here as well, so many well-known corporates that were given high ratings have now gone delinquent in the last few months and this seems to cause tension among investors.
In the recent past it has been seen that auditors have been pulled up and questioned thoroughly, for example when the government decided to ban Deloitte Haskins & Sells and KPMG on account of accusing them because they have failed to conduct proper audits of IL&FS, had they conducted their functions properly as auditors it would have saved and cautioned a ton of investors as well as the government but in the same case not many questions were raised towards the CRA’s and neither any allegations were imposed on them. The best part is that neither the government authorities, credit rating agencies nor the auditors noticed this for years and now all of a sudden when IL&FS default everything comes into the light. This brings us to question that if the rating of the company is high on what grounds should the auditor be questioned. Auditor’s job is to ensure the approved process is followed and not to become underwriters and also while the auditors are also at fault here and need to be pulled up and questioned it doesn’t seem to be entirely their fault. In fact, they’re owning up to their responsibility nowadays like in case of IndusInd Bank we saw Mr. S R Batliboi resign, in a couple of other cases too auditors have resigned when there was too much undue pressure. Here the Rating agencies sole job becomes questionable especially when such fiascos appear and so far there has been no action against the CRA’s, truth is no one questioning them on the basis of their scoring/rating.
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