Mumbai: Moodys India unit ICRA placed managing director Naresh Takkar on leave until further notice after the market regulator forwarded an anonymous complaint on the ratings of Infrastructure Leasing & Financial Services (IL&FS). This marks the first such move by a credit rating agency over IL&FS, which unexpectedly defaulted on repayments in September last year, setting off a liquidity crisis for nonbanking finance companies (NBFCs) and throwing the countrys financial markets into turmoil.
“The board of directors decided, pending the completion of the examination of the concerns raised in the anonymous representation that was forwarded to the company by Sebi, to place Naresh Takkar on leave, effective immediately, until further notice,” the rating company said in an exchange filing. The statement was signed by chairman Arun Duggal.
Chief financial officer Vipul Agarwal was named interim chief operating officer. The company said in May that it had hired an independent investigative agency to inquire into accusations of meddling in the rating of IL&FS.
Sebi has already initiated a judicial inquiry into accusations that ICRA top management allegedly influenced the ratings. Thats part of a broader inquiry into the role of rating agencies, auditors, independent directors, senior management and others who may have been in a position to call attention to the impending default but didnt.
The allegations range from failing to detect asset-liability mismatches to low capital cover. IL&FS and its group companies borrowed shortterm money to fund long-term projects, causing a credit squeeze with mutual funds and banks not extending liquidity support to the NBFCs.
The liquidity squeeze threatens to undermine measures aimed at reviving the economy by the government and central bank.
The Serious Fraud Investigation OfficeRead More – Source
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