Description
SEBI settlement order against Infomerics Valuation and Rating Private Limited for violations of Credit Rating Agency regulations including improper rating models, manipulation of weights, and poor internal controls during inspection period January-December 2021.
Summary
SEBI issued Settlement Order No. SO/SM/KS/2025-26/7502 against Infomerics Valuation and Rating Private Limited (IVRPL), a SEBI-registered Credit Rating Agency (Registration No. IN/CRA/007/2015). The order follows a joint inspection conducted with Reserve Bank of India officials at Infomerics’ Delhi office from March 21-28, 2022, covering the period January 31, 2021 to December 31, 2021. The inspection revealed multiple violations of CRA Regulations, 1999 and SEBI circulars.
Key Points
- Settlement Application No. 7502/2024 filed by Infomerics (PAN: AAACV1928K)
- Joint SEBI-RBI inspection conducted at corporate office: 104 & 108, 1st Floor, Golf Apartment, Sujan Singh Park, New Delhi - 110003
- Inspection period: January 31, 2021 to December 31, 2021
- Show Cause Notice issued on October 11, 2023 (SCN No. SEBI/HO/EAD/EAD10/S./41924/1/2023)
- Designated Authority appointed under Regulation 24(2) of Intermediaries Regulations, 2008
- New DA appointed on September 19, 2025 replacing erstwhile DA Mr. Amar Navlani
Regulatory Violations
Primary Violations Alleged:
Violation of Regulation 24(2), 24(7) of CRA Regulations and Code of Conduct (Clauses 3, 4 & 6)
- Failure to use correct rating models, distorting credit ratings
- Manipulation and tampering with weights in rating models
- Inflating final model ratings
- Inconsistent application of maker-checker system
Violation of Regulation 9(f) and Regulation 20 of CRA Regulations
- Poor internal controls
- Lack of due diligence
Violation of Code of Conduct under Schedule III
- Non-adherence to prescribed code of conduct requirements for Credit Rating Agencies
Compliance Requirements
- Credit Rating Agencies must maintain proper rating models without manipulation
- Consistent application of maker-checker systems required
- Strict adherence to internal controls and due diligence processes
- Compliance with CRA Regulations, 1999 and all SEBI circulars
- Proper documentation and transparency in rating methodology
Important Dates
- Inspection Period: January 31, 2021 to December 31, 2021
- Inspection Conducted: March 21, 2022 to March 28, 2022
- Noticee Responses: November 30, 2022 and January 10, 2023
- Show Cause Notice Issued: October 11, 2023
- Settlement Application Filed: 2024 (Application No. 7502/2024)
- New DA Appointed: September 19, 2025
- Settlement Order Date: November 13, 2025
Impact Assessment
Market Impact: Medium - The settlement order affects the credibility of ratings issued by Infomerics during the inspection period. Market participants and investors who relied on Infomerics’ credit ratings may need to reassess their risk assessments.
Regulatory Impact: High - The case highlights SEBI’s stringent oversight of Credit Rating Agencies and enforcement of CRA Regulations. Manipulation of rating models and weights is a serious violation that undermines the integrity of the credit rating system.
Industry Impact: The settlement serves as a deterrent for other CRAs regarding proper adherence to rating methodologies, internal controls, and regulatory requirements. It emphasizes the importance of maintaining robust maker-checker systems and avoiding any manipulation in rating processes.
Compliance Impact: Credit Rating Agencies need to strengthen their internal controls, ensure proper application of rating models, and maintain strict adherence to maker-checker systems to avoid similar enforcement actions.
Impact Justification
Settlement order against a credit rating agency for regulatory violations. High severity due to manipulation of rating models but medium impact as it affects one CRA entity and market participants relying on Infomerics ratings.