Brick work ratings

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Brick work ratings

In a move that was both, surprising and unprecedented, the Securities and Exchange Board of India SEBI ordered the cancellation of the recognition certificate and credit license granted to Brickwork Ratings India. Incidentally, Brickwork Ratings India is one of the seven registered credit rating agencies CRAs in India authorized to rate debt instruments and assign an appropriate rating for the same. SEBI has underlined that Brickwork Ratings India was guilty of repeated lapses and irregularities in discharging its duties. As per the order, SEBI has directed Brickwork to wind down its operations within a period of 6 months. This will have a number of implications for Brickwork Ratings and its clients. Firstly, Brickwork Ratings India has to intimate its clients about this cancellation of license. During this period, Brickwork has been specifically barred from onboarding any new clients or take fresh mandates, although they have been allowed to complete existing mandates. This move is likely to have larger ramifications for the banking industry, where there are a number of Brickwork ratings. Now all these entities have to seek a fresh rating from another agency and the fear is that in many cases there would also be a downgrade. What triggered this cancellation of the license of Brickwork Ratings India? There were several reasons. The first allegation made by SEBI is that Brickwork Ratings did not do independent analysis of projections provided by the issuer in certain cases and relied on the issuer projections. There were also lapses in disclosures and delays in default recognition. SEBI also found major lapses in the documentation of meetings conducted by the rating agency with management of the issuer and their site visits. Brickwork Ratings is a rating agency that is backed by Canara Bank.

My Screener. Reuters In a first such punitive regulatory action, Sebi last month cancelled Brickwork Ratings' licence for its failure to exercise proper skill, brick work ratings, care and diligence while discharging its duties as a credit rating agency.

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The cancellation order was issued on the grounds of operational deficiencies found in the functioning of Brickwork as a CRA, such as failure to appropriately ring fence its rating activities from other commercial activities, deficiencies in following proper rating protocols, and failure to promptly recognise credit defaults in its ratings. It should be remembered that the above order was set aside by the Securities Appellate Tribunal SAT in June , which observed that the imposition of the most severe penalty, i. SAT, while setting aside the cancellation order, remanded the case back to SEBI to pass a fresh order against Brickwork for the alleged violations and issue appropriate directions, apart from cancelling its certificate of registration. Also read: India regulator firms 'corporate group' definition amid offshore funds scrutiny. The latest directions were issued for the same operational violations observed by SEBI in its October order. However, in the interim period of 11 months between the two orders, Brickwork reviewed its internal systems and steps were taken to automate its internal processes and to bring in a more professional management team. While SEBI acknowledged the corrective measures implemented by Brickwork, it remained sceptical about the efficacy of such measures. Putting the above measures to the test, the regulator has barred Brickwork from taking on new clients till it is fully compliant with its directions. However, an unusually harsh penalty was imposed against Brickwork for seemingly routine lapses, sounding the death knell for the CRA without any room to take corrective actions. Even in previous cases involving CRAs, SEBI had issued much lighter penalties; such as a penalty of Rs 1 crore imposed on Care Ratings in for delay in downgrading the ratings of RCom this was reduced to Rs 10 lakh by SAT and a penalty of Rs 3 lakh issued against Brickwork in for delay in downgrading certain securities.

Brick work ratings

Sebi has allowed Brickworks to operate, but with several restrictions and subject to fulfilling compliance requirements. In the new order dated September 13, Sebi has asked Brickwork Ratings not to onboard new clients or take fresh mandates from existing clients for six months. Sebi has also asked the company to broadbase its board to take the total number of board members to nine. The company must also appoint an independent CEO within the next 3 months. Sangeeta Kulkarni has been the CEO of the company since its inception in Sebi has given the company 5 months time to comply with the orders that have been given. Sebi also said they will complete the review within 6 months.

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Login or Register to Post Comments. Exclusive invites to Virtual Events with Industry Leaders. During this period, Brickwork has been specifically barred from onboarding any new clients or take fresh mandates, although they have been allowed to complete existing mandates. The troubles escalated in mid when an enquiry report submitted in April made several adverse observations against Brickwork. It also did not address the issue of conflict of interest arising due to a rating committee member having business development roles. The latest directions were issued for the same operational violations observed by SEBI in its October order. Brickwork Ratings is a rating agency that is backed by Canara Bank. Commodities Views News. Serves as benchmark - The credit ratings that are given to the entities serve as a benchmark for financial market regulations. There are no reviews yet.

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The entities that are rated by credit rating agencies comprise companies, state governments, non-profit organisations, countries, securities, special purpose entities, and local governmental bodies. Font Size Abc Small. Many of these observations pertained to very serious issues. Limited Access. Stock Screener. Incidentally, Brickwork Ratings India is one of the seven registered credit rating agencies CRAs in India authorized to rate debt instruments and assign an appropriate rating for the same. It is essential that a CRA ensures quality and integrity in its rating process and its rating decisions are taken in a timely, independent and transparent manner. The SEBI issued a winding-up order against Brickwork Ratings on because of major lapses in the credit rating agencies' operations. Login or Register to Post Comments. Rating companies report sharpest rise in upgrades, improvement in creditworthiness The credit ratio, or upgrades over downgrades, has seen a steady rise since the first quarter of last year.