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The Securities and Exchange Board of India has proposed a slew of stricter measures for credit rating agencies including 10 per cent cross-shareholding cap, tighter net worth requirement, and promoter eligibility norms. The consultation paper will be open for public comments till September 29.
"No CRA (credit rating agency) shall, directly or indirectly, hold more than 10 per cent of shareholding and/ or voting rights in another CRA and shall not have representation on the Board of the other CRA," the regulator proposed in the consultation paper released on Friday evening.
This rule will also be applicable to shareholders other than rival rating agencies. However, this will not apply to holdings by broad-based domestic financial institutions.
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