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MDs on 'forced' leave, but its business as usual for ICRA and Care Ratings

July 26, 2019 20:29 IST

The reason for both the officials being sent on leave is the same - an anonymous complaint received by the market regulator against the agency.

Illustration: Dominic Xavier/

In little more than a fortnight, top executives of two of the four prominent rating agencies in the country - ICRA and CARE Ratings - have been sent on leave.

The reason for both the officials being sent on leave is the same - an anonymous complaint received by the market regulator against the agency.


Though the agencies are going about their business as usual, employee morale has taken a knock, and clients have been more curious than concerned, said a person with one of the agencies.

The industry is not sure if this will stop with CARE Ratings, or if one can expect similar action at the other agencies.

ICRA has appointed an independent agency to investigate the complaint.

The details of the two complaints are still unclear.

“Not much is known about the complaint. It is to do with some irregularities in relation to certain ratings,” said an official from a rating agency.

On July 1, ICRA informed the exchanges that its board of directors in a meeting decided that pending the completion of the examination of the concerns raised in the anonymous representation that was forwarded to the company by the Securities and Exchange Board of India (Sebi), Naresh Takkar would be placed on leave immediately and till further notice.

Takkar is the managing director (MD) and chief executive officer (CEO) for ICRA.

In a similarly worded notification, CARE Ratings on Wednesday informed the exchanges that Rajesh Mokashi, MD and CEO, has been asked to go on leave.

After sending Takkar on leave, ICRA has appointed an external agency to investigate the complaint, said a person with direct knowledge of the development.

The spokesperson for ICRA refused to comment on a timeline for the investigation. CARE Ratings is exploring a similar step.

“The board is considering appointing an external agency to enquire into the complaint after following the due processes,” said a spokesperson for CARE Ratings.

Rating agencies have been facing the heat from the market regulator after the Infrastructure Leasing & Financial Services (IL&FS) fiasco, as most of them failed to flag off financial stress at the IL&FS and its subsidiaries.

This is not the first time rating agencies are in the dock. In 2016, Sebi took a similar stand in Amtek Auto’s default case.

ICRA on July 1 appointed Vipul Agarwal as interim chief operating officer (COO), apart from his role as group chief financial officer.

CARE Ratings on Wednesday also appointed T N Arun Kumar, executive director (ratings), as interim CEO.

Moody’s Investor Service is the largest shareholder in ICRA, but the international credit rating agency has so far not made any comment on the development.

Employees at CARE Ratings are coming to terms with the new development.

“The announcement is just a day old, we have to see how things turn out in the coming days,” said an employee.

A spokesperson for CARE Ratings said the executive director (business) is continuing with the business operations, while the chief rating officer is overseeing ratings and operations independently.

Both agencies do not see day-to-day operations taking a hit.

“ICRA has a strong and experienced management team, and Vipul Agarwal has assumed responsibility for the day-to-day operations of ICRA,” a spokesperson for ICRA said in an emailed response.

“ICRA continues to provide financial market participants with quality ratings, analysis, and information and will continue to do so.”

Amritha Pillay in New Delhi