NEW DELHI, June 14 (Xinhua) -- India's market regulator "Securities and Exchange Board of India (SEBI)" has come out with strict regulations for credit rating agencies, an official circular stated.
Credit rating agencies, in consultation with SEBI, will prepare and disclose standardized and uniform "probability of default" benchmarks for each rating category on their website, both for short-run and long-run.
The rating agencies also need to flag factors that could affect the overall ratings of a particular instrument, the circular issued by SEBI said Thursday.
As per SEBI, the new benchmarks will be prepared using a methodology of "Marginal Default Rate (MDR)", which will comprise a monthly static pool for the past 10 years.
"The short-run benchmarks may account for spikes due to economic cycles or unforeseen events, and hence, may have a wider band," said the circular, adding that all default benchmarks should be disclosed on the website of each credit rating agency by December 31.
