Both ICRA and CARE were given 45 days each to pay the total amount of penalty for their failure to exercise due diligence while discharging their responsibilities as credit rating agencies.
"Considering all the facts and circumstances of the case and exercising the powers conferred upon me under section 15I of the SEBI Act read with rule 5 of the Adjudication Rules, I hereby impose a penalty of Rs 25 lakh on the Noticee viz. ICRA Limited under section 15HB of SEBI Act," adjudicating officer Santosh Shukla said. A similar order was issued for CARE as well.
The orders, however, highlighted that "though there is no allegation of any mala fide on the part of ICRA and CARE, the failure by the rating agencies is blameworthy and serious considering the degree of responsibility bestowed upon them by the statute.
"Further, in the peculiar facts and circumstances of this case the default has occurred due to lethargic indifference and needless procrastination and laxity of ICRA and CARE", the orders noted.
It was also noted that considerable reliance of investors and regulators on opinion of credit rating agencies as hallmark of creditworthiness of the issuer and the rated instruments clearly outweigh any kind of lack of due diligence by the credit rating agencies.
( With inputs from IANS )