How the Registration of Credit Rating Agencies Takes Place in India?

(1) Any person proposing to commence any activity as a credit rating agency on or after the date of commencement of these regulations shall make an application to the Board for the grant of a certificate of registration for the purpose.

(2) Any person, who was immediately before the said date carrying on any activity as a credit rating agency, shall make an application to the Board for the grant of a certificate within a period of three months from such date:

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Promoter of Credit Rating Agency:

The proposed credit rating agency must be promoted by a person belonging to any of the following categories.

(a) A public financial institution, as defined in section 4 A of the Companies Act, 1956

(b) A scheduled commercial bank included in the second schedule to the RBI

(c) A foreign bank operating in India with the approval of the Reserve Bank of India;

(d) A foreign credit rating agency recognised by or under any law for the time being in force in the country of its incorporation, having at least five years experience in rating securities;

(e) Any company or a body corporate, having continuous net worth of minimum Rs. 100 crore as per its audited annual accounts for the previous 5 years prior to filing of the application with the Board for the grant of certificate under these regulations.

Eligibility Criteria:

(a) Registered as a company under the Companies Act, 1956;

(b) Memorandum of Association must specify rating activity as one of its main objects;

(c) A minimum net worth of Rs. 5 crore;

(d) The company must have adequate infrastructure, to enable it to provide rating services in accordance with the provisions of the Act and these regulations;

(e) The company and its promoters must have professional competence, financial soundness and general reputation of fairness and integrity in business transactions, to the satisfaction of the Board;

(f) The company, its promoter, or directors must not have been involved in any legal proceeding connected with the securities market.