Mumbai: Credit rating agency Icra Ltd, the local affiliate of Moody’s Investors Service, on Monday said it has sent its managing director and chief executive Naresh Takkar on leave, pending an enquiry into “anonymous" allegations against the executive.
“Pending the completion of the examination of the concerns raised in the anonymous representation that was forwarded to the company by Sebi, the board decided to place Naresh Takkar on leave, effective immediately," Icra said in a regulatory filing.
Chief financial officer Vipul Agarwal has been in the interim appointed the chief operating officer. Icra did not elaborate on the reasons behind Takkar’s temporary suspension.
Two people with direct knowledge of the matter said the step was taken following an anonymous complaint, which alleged that there were lapses when Icra assigned a high rating of AAA to IL&FS last year.
Last September, IL&FS defaulted on its debt payments, triggering a liquidity crisis in the financial services market.
“The complaint was sent to Sebi, which has already initiated adjudication proceedings against the rating agency and its CEO. Sebi had also forwarded this complaint to Icra to examine the allegations," said the first of the two people cited earlier.
“The board of Icra has referred the said examination to KPMG," said the second of the two people cited earlier.
The complainant had alleged that Icra’s top brass had meddled in assigning high ratings to IL&FS and its subsidiaries, the person said.
Icra, in its earnings statement on 9 May, had told exchanges that based on Sebi’s reference, the rating firm was in the process of addressing the concerns raised in the anonymous complaint.
“The company is in the process of addressing certain matters (i) related to credit rating assigned to one of its customers and its subsidiaries, regarding which adjudication proceedings have been initiated by Sebi and (ii) related to an anonymous representation that was forwarded to the company by Sebi," Icra said in a statement on 9 May.
After the meeting of its board on 12 December, Sebi chairman Ajay Tyagi said the markets regulator had initiated adjudication proceedings against three rating agencies on the IL&FS matter.
Sebi’s move followed the failure of the rating agencies to inform investors on time about the deteriorating credit profile of IL&FS.
India Ratings and Research Pvt. Ltd, Icra and Credit Analysis and Research Ltd (CARE) had assigned IL&FS the highest rating of AAA, even when its subsidiary, IL&FS Transportation Networks Ltd, defaulted in June last year.
There was also an abrupt downgrade in the ratings of bonds sold by IL&FS and related entities, after they defaulted on payment obligations in September. Credit rating agencies had downgraded the bonds from high investment grade (AA+ in some cases) to default or junk.