Don’t blame the business model for rating failures

On April 20, 2023, the Securities and Exchange Board of India (SEBI) banned Rajesh Mokashi, the erstwhile managing director of CARE Ratings Limited (CARE), from being “associated with any SEBI registered intermediary, directly or indirectly, in any manner whatsoever, for a period of two years”. SEBI’s order concluded that Rajesh Mokashi had influenced the rating process for Dewan Housing Finance Limited (DHFL), because of which, purportedly, rating actions were delayed, and in one instance, not disclosed to investors. SEBI was unable to establish if he had interfered in the rating processes for Yes Bank, IL&FS, Patanjali and Cox & Kings. SEBI did not take any action against SB Mainak, CARE’s non-executive chairperson.

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