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Coronavirus outbreak: Sebi relaxes guidelines for default recognition by rating agencies

The markets regulator said it felt a need for temporary relaxations in compliance by CRAs in view of the developments arising due to Covid-19 pandemic

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Last Updated: Mar 30, 2020, 03.23 PM IST
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Reuters
Sebi Reuters 1200
Such relaxation norms will also apply to any rescheduling in payment of debt obligation done by the issuer.
Mumbai: The Securities and Exchange Board of India (Sebi) on Monday relaxed guidelines applicable to credit rating agencies (CRAs) for default recognition amid loan moratorium granted by the Reserve Bank of India (RBI) due to amid the coronavirus pandemic.

The markets regulator said it felt a need for temporary relaxations in compliance by CRAs in view of the developments arising due to Covid-19 pandemic and in light of the moratorium permitted by RBI on loan servicing, working capital facilities etc. for three months.

Based on its assessment, if the CRA is of the view that the delay in payment of interest/principle has arisen solely due to the lockdown conditions creating temporary operational challenges in servicing debt, including due to procedural delays in approval of moratorium on loans by the lending institutions, CRAs may not consider the same as a default event and/or recognize default.

Such relaxation norms will also apply to any rescheduling in payment of debt obligation done by the issuer, prior to the due date, with the approval of the investors/lenders, and will extend till the period of moratorium by the RBI, however, appropriate disclosures in this regard should be made in a press release.

Sebi also granted a further extension of 30 days to the CRAs for making annual and semi-annual disclosures on its website for the period ended March 2020.

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