Contex:
Credit Rating Agencies (CRAs) in India have approached the Ministries of Finance and Corporate Affairs, seeking immediate regulatory clarity on rating unlisted debt instruments worth over ₹1 lakh crore. These include Pass-Through Certificates (PTCs) and unlisted corporate bonds—a vital part of the country’s wholesale debt ecosystem.
What’s the Issue?
- Regulatory Overlap: SEBI regulates CRAs but only for listed securities.
- Unlisted instruments like PTCs and company fixed deposits fall outside both SEBI’s and RBI’s clear jurisdiction.
- In 2023, SEBI required CRAs to obtain an NOC from RBI for rating unlisted papers.
- While RBI allowed ratings for Certificates of Deposit (CDs), it remains silent on PTCs and unlisted bonds, leaving a regulatory grey zone.
Why This Matters
- Market Size: Unlisted instruments like PTCs help lenders (NBFCs, banks) unlock liquidity from retail loan pools.
- Investor Confidence: Ratings influence pricing, risk evaluation, and compliance standards for institutional investors.
- Capital Requirements: Banks prefer rated instruments due to lower capital provisioning needs.
TET
