The issue assumes significance after the IL&FS crisis, which had put a question mark on the practices followed by rating agencies.
has said independent directors will comprise a third of the board of a CRA if the board is chaired by a non-executive director. In case the board of the CRA is chaired by an executive director, independent directors will comprise half the board.
The regulator has also directed CRAs to set up ratings sub-committees and also nomination and remuneration committees. The CRO will directly report to the ratings sub-committee of the board of the CRA.
During the rating process, CRAs have been directed to record minutes of the meeting with issuer management and incorporate it into the rating committee note.