Sebi Asks Brickwork Ratings To Shutdown Within 6 Months The action was taken citing failure to exercise proper skill, care and diligence while discharging its duties as a credit rating agency
By Teena Jose
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The securities and exchange board of India (SEBI), on Thursday, cancelled the license of Brickwork Ratings India and ordered it to shut down the operations within six months. The action was taken citing failure to exercise proper skill, care and diligence while discharging its duties as a credit rating agency.
"The repeated lapses, noticed across multiple inspections conducted by SEBI, shows that governance changes recommended in earlier inspections, and monetary penalties imposed have not proved effective," said the regulator in the cancellation order.
The order signed by Ashwini Bhatia said that the credit regulator agency cannot take any fresh businesses. Last month, the Supreme Court had allowed Sebi to conclude the proceedings for cancellation of Brickwork Ratings license for violating various credit rating regulations.
According to reports, Sebi had carried out inspections of Brickwork for the periods April 1, 2014 to September 30, 2015 and April 1, 2017 to September 30, 2018. Later on, the capital market regulator had begun investigating the credit agency in 2020 joining with the RBI.
The key findings of the initial investigations, as per the order, include delay in recognition of default of non-convertible debentures, failure to downgrade the default, failure to review the ratings even after receiving information about delayed payments. The order also added that lack of surveillance mechanism for tracking the interest or principle repayment schedule of issuers, which would hamper the rating agency's ability to provide accurate ratings.
As per its website information, Brickwork was granted registration by Sebi in the year 2008. It is one of the seven Sebi-registered credit rating agencies operating in the country. Vivek Kulkarni, IAS, former IT secretary, government of Karnataka, is the founder and managing director of the rating firm. Canara Bank is its promoter and strategic partner.
