Sebi seeks report on action taken by rating firms against IIFL Fin & JM Fin
SEBI seeks explanation from rating agencies, Icra Ratings and Care Ratings, for their inaction following RBI's curbs on IIFL Finance and JM Finance Product. The Reserve Bank of India (RBI) banned IIFL Finance from giving new gold loans on March 4 due to lapses in the lending process, and on March 5, it banned JM Financial Product from undertaking any form of business in shares and bond funding. Curbs on the two high-margin revenue streams are expected to impact the profitability of both companies.
Mumbai: India's capital markets regulator Tuesday sought an explanation from rating agencies on what action they have taken following curbs ordered by the banking watchdog on and JM Product last week, said people aware of the development.The Reserve of India () banned IIFL Finance from giving new gold loans on March 4 due to lapses in the lending process, and on March 5, it banned JM Financial Product from undertaking any form of in and bond funding. Curbs on the two high-margin streams are expected to impact the profitability of both companies.
Despite the regulatory actions taken over a week ago, none of the rating companies has taken any rating action until March 11 (Monday). Icra Ratings and on Tuesday placed IIFL Finance debt on rating watch.
In a letter to rating agencies, the Securities and Exchange Board of India () sought a written explanation by Wednesday on action taken.
"Even as Sebi's letter appears to be seeking an explanation, effectively, it is saying why rating agencies have not reacted despite restrictive regulatory measures on two finance companies," said a senior bank official. "It signals that the regulator is unhappy about their inaction," the same person said.
Source: Stocks-Markets-Economic Times
