In a significant move for regulatory oversight of credit-rating agencies in India, Infomerics Valuation and Rating (IVR) has entered into a settlement with the Securities and Exchange Board of India (SEBI). As part of the settlement, IVR has paid ₹65.25 lakh and agreed to non-monetary corrective actions aimed at strengthening its rating-model governance and internal controls.
This development highlights growing scrutiny of rating agencies’ methodologies and their role in India’s financial markets.
What Happened: The Settlement Details
SEBI’s inspection covered the period January–December 2021 and found multiple alleged non-compliances by IVR. These included:
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Incorrect use of rating models, manipulation or tampering with weights in the models, raising concerns about inflated credit ratings.
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Poor internal controls: inconsistent application of “maker-checker” systems, data-entry errors, and arbitrary deactivation of certain parameters within the rating framework.
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Failure to correctly segregate non-rating activities and maintain quality control over scoring and model application.
Rather than contest the matter fully, IVR filed a settlement application under SEBI’s Settlement Proceedings Regulations, which was approved by SEBI’s High-Powered Advisory Committee in June 2025 and the Whole Time Members in August 2025.
As part of the settlement, IVR agreed to:
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Pay a monetary amount of ₹65.25 lakh.
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Appoint an external auditor to review and certify its credit-rating models (covering model documentation, data-validation, software controls, governance, independent testing) with a compliance report to be submitted within three months.
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Conduct independent training for its rating analysts on rating-methodology, model application and regulatory compliance, with certification of completion.
IVR confirmed submission of compliance reports on January 31 2025 and May 7 2025, and SEBI found that the non-monetary settlement conditions had been met.
Why It Matters
Strengthening Trust in Rating Agencies
Credit-rating agencies play a vital role in India’s financial markets: they affect borrowing costs, investor confidence and the integrity of credit flows. When a rating agency is found to have governance or methodological lapses, it can cast doubts on the very fabric of market trust. This settlement signals SEBI’s willingness to enforce accountability.
Model Governance & Internal Controls
The key issues in this case revolve around a rating model’s transparency, consistent application and freedom from undue manipulation. External audit of models and analyst-training initiatives, as demanded by SEBI, aim to put in place stronger mechanisms for objectivity, control and disclosure.
Regulatory Precedent
For other credit-rating agencies and financial-services entities, this case serves as a reminder that regulatory attention on model governance and internal risk controls is intensifying. Agencies cannot rely purely on compliance formality — the substance of model use and data integrity matters.
What to Watch Going Forward
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Regulatory changes: Will SEBI propose new or stricter rules governing rating-agency models, disclosures or separation of rating/non-rating activities?
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Industry impact: How will other rating agencies respond? Will they proactively enhance model-governance frameworks or face similar scrutiny?
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Investor sentiment: If rating-agency credibility comes under question, will there be impact on how investors view credit ratings in India and on borrowing costs for rated companies?
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IVR’s performance: Watch how IVR executes the corrective actions — external audit results, training quality and whether transparent disclosures follow. This will determine whether the settlement results in meaningful improvement.
Conclusion
The settlement between Infomerics Valuation and Rating and SEBI marks a critical moment in the oversight of credit-rating agencies in India. With a monetary penalty and binding non-monetary corrective measures, the move underlines the importance of robust model governance, quality controls and regulatory compliance in the rating-agency domain. For investors, regulators and the agencies themselves, the message is clear: methodological integrity and internal discipline matter as much as the rating itself.