UPSC Prelims 2022 – Question 63

Here is Question No. 63 a part of our series on UPSC Prelims 2022.

Q63. Consider the following statements:

1. In India, credit rating agencies are regulated by the Reserve Bank of India.
2. The rating agency popularly known as ICRA is a public limited company.
3. Brickwork Ratings is an Indian credit rating agency.

Which of the statements given above are correct?
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3

Answer – B

1. Statement 1 is incorrect: Credit Rating Agencies form an essential part of the financial markets. They are regulated by SEBI and not by RBI under the powers derived from the Securities and Exchange Board of India (Credit Rating Agencies) Regulations, 1999. The SEBI (Credit Rating Agencies) Regulations, 1999 provide for eligibility criteria for registration of credit rating agencies, monitoring, and review of ratings, requirements for a proper rating process, avoidance of conflict of interest, and inspection of rating agencies by SEBI, amongst other things.
2. Statement 2 is correct: ICRA Limited (formerly Investment Information and Credit Rating Agency of India Limited) was set up in 1991 by leading financial/investment institutions, commercial banks, and financial services companies as an independent and professional investment Information and Credit Rating Agency with its shares listed on the Bombay Stock Exchange and the National Stock Exchange.
3. Statement 3 is correct: Brickwork Ratings (BWR) is a SEBI-registered Indian Credit Rating Agency. It has also been accredited by RBI and offers rating services on Bank Loans, NCD, Commercial Paper, Fixed deposits, Securitized paper, Security
   receipts, etc. Brickwork Ratings has Canara Bank, a leading Public Sector Bank, as its promoter and strategic partner.

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