SEBI Tightens Norms for CRAs to Rate Instruments Under Other Regulators

Why It Matters

The rules sharpen investor protection and force CRAs to segregate compliance, raising operational costs while enhancing market transparency across regulatory domains.

Key Takeaways

• CRAs need separate email IDs for non‑SEBI ratings.
• Minimum net‑worth must stay unchanged across regulator activities.
• Disclosure must list regulator, risk, no SEBI protection.
• Separate grievance channels effective after twelve months.
• Half‑yearly audit requires compliance undertaking submission.

Pulse Analysis

India’s securities market regulator is tightening the oversight of credit rating agencies, a move that reflects a broader global trend toward stricter governance of rating practices. By requiring CRAs to maintain distinct communication channels and disclosures for instruments falling under non‑SEBI regulators, SEBI aims to eliminate confusion for investors and ensure that rating methodologies remain transparent. This separation also safeguards the regulator’s net‑worth requirements, preventing agencies from diluting capital buffers when diversifying into other regulatory spheres.

The operational impact on CRAs will be immediate and measurable. Firms must set up dedicated email addresses, redesign websites, and embed regulator‑specific language into every rating report. Additionally, they are obligated to secure written client acknowledgments that SEBI’s grievance mechanisms do not apply, and to file half‑yearly audit undertakings confirming compliance. While these steps increase compliance costs, they also create clearer risk signals for investors, who can now distinguish between SEBI‑protected and non‑protected ratings, reducing potential legal exposure.

Long‑term, the tightened framework could elevate the credibility of Indian credit ratings in both domestic and cross‑border markets. By aligning disclosure standards with investor expectations, SEBI may encourage higher‑quality ratings and foster greater confidence among global investors eyeing Indian debt instruments. The staggered rollout—most rules in 60 days, grievance channels after a year—gives CRAs a transition window, but signals that further regulatory convergence is likely as authorities seek cohesive oversight of the expanding financial ecosystem.

SEBI tightens norms for CRAs to rate instruments under other regulators

Separate grievance channels, disclosures mandated; most rules effective in 60 days · Updated · February 10, 2026 at 07:45 PM

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