Facing heat, Moody\'s India arm ICRA sends managing director on indefinite leave
Photo Credit: Reuters

The board of ratings agency ICRA has asked managing director and chief executive Naresh Takkar to go on indefinite leave amid an examination of the concerns raised in an anonymous representation that was forwarded to the company by the capital market regulator Securities and Exchange Board of India (SEBI).

Also, the ratings agency has given chief financial officer Vipul Agarwal an additional role of interim chief operating officer, who will be reporting to the board. ICRA is 51.87% owned by global ratings agency Moody’s.

Agarwal will be responsible for handling ICRA’s ratings and non-ratings businesses.

In May, ICRA had said that it had hired an investigative agency to inquire into anonymous accusations of meddling in the ratings of debt-ridden Infrastructure Leasing & Financial Services (IL&FS).

SEBI is already probing the case and has launched adjudication proceedings against three rating agencies: ICRA, Care Ratings and India Ratings and Research.

IL&FS unexpectedly defaulted on its debt obligations and bond repayments in September last year, setting off a liquidity crisis for non-banking financial companies (NBFCs) and throwing India's financial markets into turmoil.

The ratings agencies have been under the scanner for not downgrading the commercial paper of IL&FS Financial Services despite weak financials.

Incidentally, the ratings agencies had given IL&FS debentures AAA ratings, the highest level of creditworthiness, until its subsidiary IL&FS Transportation Networks defaulted in June last year.

On Tuesday, shares of ICRA plunged over five per cent in early trade on BSE.

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