Credit Rating Agency in IFSC GIFT City

IFSCA Official had released a detailed framework for Credit Rating Agencies (CRAs) operating within the GIFT City  IFSC. This framework aims to streamline operations, ensure compliance, and enhance investor protection.

Key Definitions and Client Categories

A "credit rating agency" is defined as any entity engaged in rating securities or financial products. Eligible clients include:

• Non-residents of India

• Non-resident Indians

• Non-individual residents eligible for offshore investment under FEMA

• Individual residents eligible for offshore investment under the Liberalized Remittance Scheme of the RBI

Permissible Activities

1. CRAs must enter written agreements with clients, detailing rights, liabilities, and fees.

2. Clients must disclose past ratings and cooperate for accurate ratings.

3. CRAs must continuously monitor and review ratings and disclose changes publicly.

4. CRAs cannot withdraw ratings while obligations under rated securities are outstanding, except under specified conditions.

Structure and Net Worth Requirements

Entities eligible for registration include companies, LLPs, body corporates, and partnerships. Net worth requirements are:

• Indian units: USD 3 million

• Foreign entities: USD 6 million

Fees and Staff Requirements

• Application Fee: USD 1,000

• Registration Fee: USD 3,500

• Annual Fee: USD 3,500 (from the next financial year after approval)

Each CRA must appoint a Principal Officer with a relevant postgraduate degree and at least five years of experience. Sufficient qualified staff is mandatory.

Code of Conduct

1. Maintain due diligence, care, and independence.

2. Ensure an arm’s length relationship between rating activities and other operations.

3. Disclose rating methodology and avoid unfair competition.

4. Track client changes and respond promptly.

5. Disclose conflicts of interest and prevent misuse of information.

General Capital Market Intermediary Code of Conduct

1. Protect investors' interests and provide professional advice.

2. Maintain high standards of integrity and fairness.

3. Avoid manipulative or deceptive practices.

4. Handle investor inquiries and grievances efficiently.

5. Ensure confidentiality and avoid conflicts of interest.

6. Ensure internal control procedures and operational efficiency.

Tax Benefits

• 100% tax exemption on business profits for 10 out of the first 15 years.

• Reduced Minimum Alternate Tax (MAT) rate of 9% for IFSC units.

For more details, visit: Tax Benefits in GIFT IFSC.

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Disclaimer: This post is for informational purposes only and does not constitute professional advice. While efforts are made to ensure accuracy, we do not guarantee the completeness or reliability of the information provided. Any reliance is at your own risk. Consult professionals for specific advice.