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SEBI relaxes Debt Default Norms for default recognition by Credit Rating Agencies amidst Nationwide Lockdown

Debt Default Norms - Taxscan

The Security and Exchange Board of India (SEBI) has relaxed the debt default norms for default recognition by Credit Rating Agency (CRA) amidst a nationwide lockdown due to COVID-19.

The Security and Exchange Board of India (SEBI) issued a circular on March 30, 2020 in the name of General Manager, Surabhi Gupta; addressing all the Credit Rating Agencies (CRAs) registered with Security and Exchange Board of India (SEBI). The circular seeks to relax the debt default norms because of the pandemic COVID-19.

Markets regulator Security and Exchange Board of India (SEBI) has Security and Exchange Board of India (SEBI) has also relaxed compliance norms for AIFs, VCFs, Portfolio Managers, FPIs due to COVID-19 pandemic. SEBI asked Credit Rating Agencies (CRAs) not to consider as default any delay in payment of interest or principal loan amount arising solely due to the nationwide lockdown conditions. The move follows a 3-month moratorium on payment permitted by the Reserve Bank of India (RBI) to mitigate the burden of debt servicing, due to disruptions caused by the Coronavirus pandemic and to ensure continuity of viable businesses.

Security and Exchange Board of India (SEBI) also granted a further extension of 30 days to the Credit Rating Agencies (CRAs) for making annual and semi-annual disclosures on its website for the period ended March 2020. Earlier last week, the Security and Exchange Board of India  (SEBI) had announced the relaxation of compliance norms for listed entities with regard to the filing of the fourth quarter and annual earnings.

SEBI stated that such relaxation of norms will also apply to any rescheduling in payment of debt obligation done by the issuer, prior to the due date, with the approval of the investors/lenders, and will extend till the period of moratorium by the RBI, however, appropriate the disclosure is in this regard.

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