POLICY ON COMPENSATION FOR RATINGS
RBI vide their circular letter DBOD.BP.No./5382/21.06.007/2012-13 dated April 26, 2013, advised all accredited Credit Rating Agencies to disclose the nature of its compensation arrangement with the rated entities on their websites. Since the letter was issued in 2013 i.e before our getting licence, we had made a policy but did not uploaded on our website. This has been observed in the recent SEBI/RBI Inspection held from Feb 24 to 27, 2020 and the observation was mentioned by RBI in the report under para (t). All other CRAs have disclosed the compensation fee on their websites.
Since the policy was prepared in 2015, we deemed it fit to review the same and upload on our website to comply with the regulatory directives as. We therefore, are placing the reviewed policy on compensation with the rated entities. INFOMERICS shall follow a transparent policy on initial rating fees and surveillance fees to be charged to the clients for extending the services for rating their various instruments. This policy is prepared in the following two parts.
- The rack rate compensation policy which need to be uploaded on the website as per the directives of RBI;
- Delegation powers to various authorities to approve any concession in the fee structure stated in the policy and uploaded on our website.
We are extending different rating products. Therefore as per practice and for the sake of convenience we propose the fee structure to be computed as a percentage of debt amount to be rated subject to collection of minimum fees to cover our cost.
THE PROPOSED FEE STRUCTURE FOR DIFFERENT PRODUCTS IS GIVEN BELOW:
A. THE RACK RATE COMPENSATION POLICY WHICH NEED TO BE UPLOADED ON THE WEBSITE AS PER THE DIRECTIVES OF SEBI/RBI.
1. FOR BANK LOANS/FACILITIES
The minimum fee structure for rated/ unrated Bank loan/facilities ratings is given as under:
- Initial Rating fee - 0.10% of the debt/facility amount to be rated subject to a minimum flat fees of Rs. 40,000/- up to debt size of Rs 10 crore)
- Annual Surveillance fee - 0.04% of the debt/facility amount being rated subject to a minimum fees of Rs. 30000/-)
2. FOR BANK LOANS/FACILITIES
- The initial rating fee shall be -0.06% of the outstanding amount of Fixed Deposits subject to a minimum of Rs.250,000/-
- Annual Surveillance fee - 0.03% of the Fixed deposit limit being rated subject to a minimum fees of Rs. 150,000/-
3. DEBENTURES /BONDS/NCDS
- The initial rating fees shall be - 0.05% of the issue amount subject to a minimum of Rs.250,000/-
- Annual Surveillance fee shall be - 0.03% of the debt/facility amount being be rated subject to a minimum fees of Rs. 150000/-)
4. COMMERCIAL PAPERS
- The initial rating fees shall be -0.06% of the issue amount subject to a minimum of Rs.200,000.
- Annual Surveillance fee - 0.03% of the facility amount being rated subject to a minimum fees of Rs. 100,000/-
5. COMMERCIAL PAPERS
- The initial rating fees shall be minimum of Rs 100,000/-.
- Annual Surveillance fee shall also be minimum of Rs. 75000/-
- The above fee is excluding the GST and any other taxes applicable or applied later by the government.
- Out-of-pocket expenses, if any, will be charged to the client on actual basis.
- The initial rating fees/annual surveillance fees shall be paid upfront in full before the assignment is completed.
- Rating fees are computed separately on each instrument issued.
- INFOMERICS may consider alternative price structure for select clientele on case to case basis based on the industry type, facility proposed for rating and complexity of the rating exercise.
- INFOMERICS shall have a separate compensation policy for rating Government departments, undertakings, corporations and for tender bidding.
- This disclosure is being made as per the directions of Reserve Bank of India vide communication no DBOD/BP/No./5382/21.06.007/2012-13 dated April 26, 2013
Last Updated: July, 2020.