IDFC First Bank Limited

Thanks @Ajay_Kumar_Kommaraju for the link and interpretation

Relevant section from SEBI report Finshots was referring to, but didn’t find mention rated to regulator finding something untoward happening in the meeting

"Lastly, I note from the Enquiry Report that in respect of IDFC First/IDFC Bank, the actual fee received by the Noticee was lower than the fee mentioned in the Contractual Rating Agreement /Covering Letter /Request Letter. It has also been recorded in the Enquiry Report that a deduction in the fee was granted consequent to a meeting between the FD of the Noticee and the Issuer. There is, however, no mention of this meeting in the Ratings Committee Notes or the minutes. In this regard, it has been submitted that IDFC Bank was not a regular client of the Noticee since it had only rated Capital First Ltd which had merged into IDFC Bank. Consequent to the merger of Capital First and IDFC Bank, the Noticee had to keep a track of the rated facilities that had migrated from Capital First to IDFC Bank and the rated facilities were either getting extinguished or modified (from a security perspective). The Noticee has submitted that it was in this context that the Noticee’s Head of BFSI Ratings and President–Business Development decided to meet IDFC Bank’s Management. Another agenda of this meeting was also to get mandate in the name of IDFC First Bank. As the Bank was represented by the Managing Director and the Chief Executive Officer, the FD of the Noticee was also invited. The FD of the Noticee did have a courtesy meeting with the Managing Director of IDFC First Bank, the HeadBFSI Ratings of the Noticee discussed the rating related aspects. Similarly, PresidentBusiness Development had visited the office to meet his contacts in the Bank who were negotiating for a reduced fee, as, generally, fee structure for banks was different from that for NBFCs. While President–Business Development took a commercial decision for reducing the fee, the same had no correlation with the Noticee’s FD’s meeting with the Managing Director of the Bank, which was a courtesy call. It is a fundamental principle of the CRA Regulations that the dual role of engaging in business development while also involved in the analytics process for rating of securities goes against the spirit of the CRA Regulations. As may be seen from the above, clarification with respect to the meeting of the FD of the Noticee with the CEO of the IDFC Bank has been provided by the Noticee. It is not in dispute that there was a meeting between the FD of the Noticee and the CEO of IDFC Bank. That being said, the fact that the FD of the Noticee and the CEO of IDFC Bank in the presence of the Head of BFSI Ratings and President–Business Development raises questions about the intent of such meeting. Further, it is clear that the actual fee charged was less than that mentioned in the Contractual Rating Agreement /Covering Letter /Request Letter. In such circumstance, the clarifications provided above could have easily been provided in the Notes placed before the Rating Committee or the minutes of the meeting of the Rating Committee. However, evidently the same has not been done by the Noticee. "

More of a case related to lapses by rating agency at the time of merger with capital first. Anyway, future ratings of IDFC First will be done with greater scrutiny and can be good monitor able for all invested.

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