Public comments on Consultation Paper on proposed Amendments in CMI Regulations and Master Circular with respect to Credit Rating Agencies in IFSC

Public Comments Public comments received on Consultation paper on proposed Amendments in CMI Regulations and Master Circular with respect to Credit Rating Agencies issued on March16, 2026. The following comments/suggestions were received:

Sr. Paragraph No. of Suggestions along with revised Clause in line with the Detailed rationale along with supporting information No the Draft Circular suggestion 1 Agree with the proposals in the consultation paper.

2 A. 5.2 Suggestion: Introduce a "Public Notice Period" for While making the list illustrative is welcome, a (Withdrawal of withdrawals sudden "principle-based" withdrawal can create Ratings) and ensure the "approved policy" is filed with the Authority. market shocks. A mandatory notice period ensures Investor Protection, a core mandate of IFSCA, and

Revised Clause: (Add to second proviso): "...Provided prevents "rating shopping" where further that an issuer might push for a quick withdrawal to hide a the reason for withdrawal shall be mentioned in the press pending downgrade release.

Except in cases of liquidation or merger, the CRA shall provide a notice period of 30 days prior to the effective date of withdrawal to allow investors to recalibrate risk." B. 4.1 (Record Suggestion: Clarify the "standard of documentation" Removing the requirement for "minutes" protects Keeping) required to members reconstruct the process while protecting committee from undue influence. However, to maintain anonymity. auditability, the record must capture the substance of the debate.

Revised Clause: "...detailed and comprehensive to Without this "summary" requirement, internal reconstruct the records credit rating process... including a summary of the key might become too sparse to allow the Authority to arguments for and against the final rating decision, without effectively supervise the CRA’s analytical rigor.

necessarily attributing views to specific individuals."C. 4.3 (Disclosure Suggestion: Clarify that "Private" does not exempt the CRA Private ratings are rightfully excluded from public of Private Ratings) from websites confidential regulatory reporting to the Authority. for confidentiality. However, for Systemic Risk Monitoring, the Authority needs to know the volume

Revised Clause: (Add to the proviso): "...shall not be and mandatory default trends of private ratings. This ensures the for private credit rating assignments, provided that aggregate "Private" data carve-out doesn't become a "dark corner" of the for such ratings is submitted to the Authority for supervisory market.

purposes on a periodic basis." E. 5.2 Suggestion: Replace "adequate opportunity" with a defined We view "adequate opportunity" as a phrase ripe for (Dissemination - statutory timeline to prevent issuers from "stalling" rating litigation. To ensure the independence of the CRA, Para 17.1) actions. the issuer must have a clear, narrow window to point out facts.

Revised Clause: "...and afford such issuer an opportunity A defined timeline prevents issuers from using the (not "factual review" process as a tactical delay for exceeding three working days) to clarify any factual unpleasant rating downgrades.

errors..."

New Suggestion Suggestion: Explicitly include ESG Ratings or Given IFSCA’s push to become a "Green Finance (D. 3) "Sustainability Hub," Assessments" as a permissible activity. explicitly listing ESG ratings as a permissible activity for Proposed Addition to 5.1: "...5.1.7. ESG Ratings and CRAs aligns the Master Circular with global trends Sustainability Assessments/Evaluations." (like the EU's new ESG Rating Regulations) and provides legal clarity for CRAs diversifying their product suites.3 Paragraph B.4 “The CRA shall maintain information and records The existing clause is comprehensive and does not supporting each credit rating and review in electronic specifically highlight the requirement of retrieval form for a period (as mentioned in the CMI documentation of Regulations) from the date rating is withdrawn or individual committee members' votes. Moreover, discontinued, including the following information/ records: committee members discuss on the case and eventually

13.1.10.1. The important factors underlying the credit assigns the final rating based on majority votes or rating; consensus, without recording individual vote.

13.1.10.2. Decisions and minutes of the rating committee. Accordingly, the decision and minutes of the rating “ committee capture only the committees' final rating decision, along with other critical information

Provided further the decision of individual committee supporting members is not required to form a part of minutes of the each credit. rating committee.

Further, the proposed clause highlights CRA to determine and maintain the information and records that are "sufficiently detailed and comprehensive". This introduces potential ambiguity around the notion of sufficiency and may result in a more subjective interpretation of documentation requirements, rather than an objective and standardised approach.

Therefore, retaining the existing requirement to documentthe important factors underlying the credit rating and the decisions and minutes of the rating committee— without mandating the capture of individual members’ voting—would provide greater clarity by explicitly defining the scope of documentation required and ensuring consistency across agencies.

Paragraph D.3 A Credit Rating Agency registered with the Authority (“the A. Within credit ratings, financial strength rating and CRA”) under the CMI Regulations is permitted to carry fund ratings to be called out explicitly as financial

out the following activities: strength rating is for the insurance company to

5.1.1. Credit ratings ability to meet its

Explanation 1: Credit ratings can be of any financial product policyholder obligations and pay claims and not for or financial instrument, issuer in the IFSC or any financial product or financial instrument or issuer Foreign Jurisdiction based on global scale (foreign currency rating.

or local currency) ratings. On the other hand, fund ratings represent the

Explanation 2: Credit ratings shall include private ratings. performance

5.1.2. Sovereign Ratings of fund by assessing the creditworthiness of the

5.1.3. Valuation Services investments in the fund’s portfolio as opposed to the

5.1.4. Research creditworthiness of a fund itself.

5.1.5. Rating Assessment / Evaluation Services

5.1.6. Monitoring Agency” B. CRAs registered with the Authority should also be

5.1.7. Financial Strength Rating, allowed to provide grading services which may be Funds Ratings helpful

5.1.8. Grading Services for the entities/market to assess their relative position in the competitive landscape across various aspects of business. This will help market participants withindependent opinion to assess the gradings and develop the ecosystem to replicate the best practices due to competition.

C. Also, the market participants seek engagements with CRAs on launching products (such as Partial credit enhancement (PCE) facility) which may require expert inputs from CRAs from credit risk perspective. These developments will benefit the overall financial system without interfering the ratings of individual instruments.

We believe that such broad-based services are already enabled as a part of Research (as discussed with IFSCA in the past).

Paragraph E.5.2 17.1. All the rating actions on initial credit ratings The existing clause, which stipulates issuer’s assignments, once accepted by issuer, shall be acceptance at the time of initial rating, does not disseminated by the CRA on its website along with the impact the rating rationale. All subsequent rating actions on accepted independence of rating process. All domestic CRAs ratings shall be disseminated by CRA on its website along operating under SEBI's regulatory framework have with the rating rationale. followed similar provisions for over three decades while effectively maintaining independence. Further,

Provided that the said requirement relating to both CareEdge Global and S&P, operating underdissemination of ratings shall not be mandatory for IFSCA jurisdiction, have functioned within the unsolicited ratings and private credit rating assignments. existing framework without any adverse impact or challenges

17.2. Where the rated instruments are listed on a to their independence. recognised stock exchange in the IFSC, the CRA shall disclose the ratings to the stock exchange(s) in accordance The option to accept the rating is provided to the with the requirements specified under regulation 28(6) of issuer while assigning initial rating so that the issuer the CMI Regulations. can understand the process, outcome of the rating process, future process requirements to provide critical information for surveillance of rating. Hence, it gives the issuer the confidence and understanding that they could maintain the rigour of the rating process without challenges.

Note: During the public consultation, comments were received from various stakeholders. Modifications, if any, shall be suitably carried out in the circular.