India: COVID-19-Hit Microlenders Knock on SEBI’s Door Seeking Extension of Rating Period

Source: Money Control

Microfinance institutions (MFIs) have sent a distress call to markets regulator, the Securities and Exchange Board of India (SEBI), seeking to instruct credit rating agencies to delay the ratings on microlenders whose operations have been disrupted by the impact of COVID-19. Rating agencies typically revise ratings of microlenders after 12 months. This time, microlenders want an extension of three months to this period. In the absence of this, ratings will not reflect the correct financial position of MFIs, microlenders fear.

Despite the lockdown, some of the microlenders have started to get communication from agencies  on further rating revision, said P Satish, Executive Director of Microfinance body, Sa-Dhan.“It is necessary that rating agencies should wait for the situation to normalize in the country and normal economic activities to resume before giving a fresh rating to MFIs,” Sa-Dhan wrote in a letter to SEBI.