Ministry for cap on rating agencies

Activities of rating agencies – like project evaluation and assessment of real estate properties and builders – which fall outside the ambit of the RBI and SEBI will be supervised by those authorities which are concerned with these areas. For example, assessments carried out on real estate and builders, can be supervised by the Union ministry of urban development or a similarly authorised body.

The ministry has forwarded its multi-agency supervision proposal for a final decision to the high level committee on capital markets under the ageis of the RBI governor, C Rangarajan.

The other members of the committee are the Union finance secretary and the chairman of SEBI. A decision is expected shortly. The need for different supervision agencies has been felt following the assertion by SEBI that it will not be possible for the regulatory body to monitor non-securities’ market related activities of rating firms.

Arihant Credit downgraded

MUMBAI: Credit Analysis & Research Ltd (CARE) has downgraded the rating for the fixed deposit programme of Arihant Credit Capital Ltd (ACCL) from BBB to BB. The revised rating is considered to be speculative, with inadequate protection for interest and principle payments.

For 1997, ACCL has reported a 20 per cent decline in income and a 68 per cent deline in net profit over 1996. “Income from securities trading saw a drastic decline of 76 per cent due to adverse capital market conditions that prevailed during the year,” CARE said.

ACCL has a substantial exposure to the capital market, aggregating over 25 per cent of the total capital employed as on March 1997. The portfolio comprised illiquid scrips and as the year, there was an erosion of over 60 per cent in the value of quoted investments. “During the year, ACCL advanced loans to certain relatively less known firms and corporates," Care said.