Mumbai, Oct. 25: The Securities and Exchange Board of India (Sebi) is devising a corporate governance rating method in consultation with rating majors Credit Rating and Information Services of India Ltd (Crisil) and Icra.
“This type of rating will help market forces dictate the value of the company,” Sebi chairman G. N. Bajpai said.
Bajpai said the ratings would not be made mandatory, but added that as in the debt markets, investor pressure will ensure that the companies seek such a rating. He said the rating will be in numerical order.
Like the debt markets, where investors buy debt securities on the basis of their rating, the time is not far when equity investors will buy shares on the basis of the company’s ratings, Bajpai added.
“While it will be made optional for corporates, market forces will start pushing the corporates to get a rating,” he said, adding, “while the idea of corporate governance originated abroad, we will take it a step forward.”
The Sebi chairman said the coming board meeting will deliberate on the demutualisation of stock exchanges.