SEBI tightens norms for CRAs to rate instruments under other regulators

Under the new framework, CRAs must maintain separate email IDs and web disclosures for SEBI-regulated activities and those regulated by other authorities

The Securities and Exchange Board of India (SEBI) has tightened obligations for credit rating agencies (CRAs) when they rate financial instruments that fall under the jurisdiction of other financial sector regulators.

The circular, issued on Tuesday, sets out conditions on grievance handling, disclosures, net worth, client communication and internal audits for such activities, in order to “protect the interest of investors in securities and to promote the development of, and to regulate, the securities market,” it said.

Separate disclosures

Under the new framework, CRAs must maintain separate email IDs and web disclosures for SEBI-regulated activities and those regulated by other authorities. They must also ensure that their minimum net worth, as prescribed under SEBI’s CRA regulations, is not affected by undertaking ratings for instruments overseen by other regulators.

The regulator has also mandated clearer disclosures. CRAs will have to publish the list of activities along with the name of the relevant regulator and ensure that marketing material for non-SEBI activities is kept separate. Rating reports for such instruments must explicitly mention the applicable regulator and state that SEBI’s investor protection and grievance redress mechanisms will not apply.

Further, CRAs must give upfront written disclosures to clients stating that such activities fall under another regulator’s purview and obtain confirmation that clients understand the risks and the non-availability of SEBI protection mechanisms.

Existing clients must also be intimated in writing about the nature of such activities and the absence of SEBI grievance redress, with CRAs required to confirm compliance to the regulator.

In addition, CRAs undertaking such activities will have to submit an undertaking as part of their half-yearly internal audit report, confirming compliance with the regulations and circulars.

Provisions relating to separate grievance channels and client intimations will come into effect after 12 months, while the remaining requirements will be effective 60 days from the date of the circular.

Published on February 10, 2026