Sebi recommends 10% cross-shareholding cap in rating agencies

Market regulator, Securities and Exchange Board of India (SEBI) has proposed cross-holding in credit rating agencies (CRAs) will be capped at 10 percent. The regulator also decided to raise the minimum net-worth requirement to Rs 25 crore from the current Rs 5 crore. The proposed norms are likely to have an impact on global rating agencies like S&P, Moody's and Fitch which have significant holdings in domestic agencies besides their direct presence. Under the proposal, the promoter of a CRA would have to maintain a minimum shareholding of 26 percent in the CRA for a period of three years from the date of registration. The move would check the menace of 'rating shopping' and 'pick-and-choose' approach in their actions.