Credit rating agencies charge fees for the credit rating services they provide. In India, the Securities and Exchange Board of India (SEBI) has issued regulations regarding the fees that can be charged by credit rating agencies (CRAs).
The fees charged by CRAs in India may vary depending on the type of instrument being rated, the complexity of the rating, and the reputation and experience of the CRA. Some of the common types of fees charged by CRAs in India include:
- Rating Fees: The rating fee is the basic fee charged by a CRA for rating a particular instrument. The fee may be charged upfront or in instalments, depending on the terms of the agreement.
- Surveillance Fees: A CRA may charge a surveillance fee for monitoring the rating of an instrument over time. This fee is usually charged on an annual basis and is meant to cover the cost of ongoing monitoring.
- Issuance Fees: Issuance fees are charged by CRAs for rating new securities issues. These fees are typically higher than the fees charged for surveillance.
- Review Fees: A review fee may be charged by a CRA if a company or issuer requests a review of an existing rating. The fee may be charged on an hourly basis or a flat fee, depending on the nature of the review.
- Advisory Fees: CRAs may also offer advisory services to clients, such as credit risk assessment, credit analysis, and credit enhancement services. These services are usually charged on an hourly or project basis.
It is important to note that the fees charged by CRAs in India are subject to SEBI regulations, which require transparency in fee structures and prohibit CRAs from charging fees that are unreasonable or unfair.