Business

IL&FS case: Rating agencies faked IFIN ratings to dupe investors

New Delhi: Credit rating agencies played major villain in the IL&FS crisis as they adjudged positive and impressive ratings on a regular basis to commercial papers and non-convertible debentures (NCDs) of IL&FS Financial Services (IFIN) despite unhealthy financial condition of the company, revealed an investigation report submitted by the Serious Fraud Investigation Office (SFIO) to the Ministry of Corporate Affairs.

The document shows that several investors who subscribed to the IL&FS’ financial arm’s NCDs and commercial papers, attributed their decision to invest on the high ratings accorded by the rating agencies.

Anurag Jain, Chief Investment Office at Canara HSBC OBC Life Insurance Company, which invested around Rs 30 crore in commercial papers and around Rs 10 crore in NCDs of IFIN, said their decision to invest was primarily influenced by the credit ratings provided by CARE and ICRA.

“The investment in the IL&FS/IFIN papers was done primarily on the basis of the rating of the companies as provided by the rating agencies CARE and ICRA, which are the highest rated in their categories,” the SFIO document quoted Jain as saying.

During the period between 2013 and 2018, the agencies which gave ratings to the financial instruments of IFIN were CARE Ratings, ICRA Ltd, India Ratings & Resarch and Brickwork Rating India, according to the document.

With an investment of around Rs 115 crore in IFIN’s NCDs, the Oriental Insurance Company was also apparently duped by the ratings accorded to IFIN.

“The basis of selection of debt securities are based on the financials, credit ratings and best yields available in the market. IFIN is an NBFC and based on the financial, credit ratings and better yields available, some funds have been allocated periodically based on the constant AAA ratings assigned by two rating agencies, CARE and India Ratings,” said Dushyant Kumar Bagoti, DGM at Oriental Insurance Company.

Further, manager at the New Indian Assurance Company, Gyan Ranjan, recorded on oath said: “If rating is AA or above then there should not be any issue on the repayment.”

New India Assurance Company had invested Rs 62 crore in IFIN NCDs.

Implicating the rating agencies, the SFIO said in the document: “From the above it is clear that the investor in NCDs were induced to investment based on the heavy financials and credit rating assigned to the company.

“The investors of the NCDs of the company were induced by the management by deliberately concealing the material facts pertaining to the true and fair view of the affairs of the company and the observation of the RBI with respect to NOF, CRAR etc, which had major adverse effect on the company’s capacity to continue as going concern.”

SFIO also noted that largely all the four agencies had given the highest rating to the long-term and short-term instruments of IFIN on the strength of its parentage and management linkages with the Infrastructure Leasing & Financial Services Limited (IL&FS).

The probe into the role of credit rating agencies with regard to IFIN needs to be taken further in the ongoing investigation of IL&FS, it said.

With the testimonials and evidences going against the rating agencies, they might be next in the line of fire after the auditors of IL&FS, which the government wants to bar from auditing operations in the country.

The operations of rating agencies are already under close watch of the Securities and Exchange Board of India (Sebi) and the Reserve Bank of India (RBI) and both the regulatory bodies are looking into the business model of these agencies.

35 Comments

35 Comments

  1. Pingback: addiction

  2. Pingback: sbobet

  3. Pingback: research companies Buffalo

  4. Pingback: دردشة عربية

  5. Pingback: เงินด่วนนอกระบบ 30 นาที สุรินทร์

  6. Pingback: vliegendeschotel.com

  7. Pingback: kalpa pharma legit

  8. Pingback: watchesreplica.to

  9. Pingback: Coolsculpting

  10. Pingback: bitcoin auto invest

  11. Pingback: Harold Jahn Edmonton

  12. Pingback: repair service

  13. Pingback: What is digital transformation

  14. Pingback: Samsung HMX-H204BN manuals

  15. Pingback: 프로툰

  16. Pingback: diamond art painting

  17. Pingback: Best cbd oil

  18. Pingback: Devops Tools List

  19. Pingback: https://www.fairmondo.de/users/daleyza_gwendolyn

  20. Pingback: cheap hotels near london 02 arena

  21. Pingback: replica diamond rolex yellow Swiss Eta movement

  22. Pingback: cvv shop ru

  23. Pingback: productrolex datejust 179179 mens automatic 36 mm steel yellow gold

  24. Pingback: Chaturbate Nainen

  25. Pingback: cbn-oil

  26. Pingback: sbo

  27. Pingback: Malmo dating

  28. Pingback: sbo

  29. Pingback: sbo

  30. Pingback: read more

  31. Pingback: sbobet

  32. Pingback: order magic mushrooms online usa​

  33. Pingback: hop over to this website

  34. Pingback: go right here

  35. Pingback: Buy Changa DMT online New South Wales

Leave a Reply

Your email address will not be published.

19 + ten =

News is information about current events. News is provided through many different media: word of mouth, printing, postal systems, broadcasting, electronic communication, and also on the testimony of observers and witnesses to events. It is also used as a platform to manufacture opinion for the population.

Contact Info

Address:
D 601  Riddhi Sidhi CHSL
Unnant Nagar Road 2
Kamaraj Nagar, Goreagaon West
Mumbai 400062 .

Email Id: [email protected]

West Bengal

Eastern Regional Office
Indsamachar Digital Media
Siddha Gibson 1,
Gibson Lane, 1st floor, R. No. 114,
Kolkata – 700069.
West Bengal.

Office Address

251 B-Wing,First Floor,
Orchard Corporate Park, Royal Palms,
Arey Road, Goreagon East,
Mumbai – 400065.

Download Our Mobile App

IndSamachar Android App IndSamachar IOS App
To Top
WhatsApp WhatsApp us