Sebi issues show-case notice to 2 former senior executives of CARE Ratings



The (Sebi) on Friday issued a show-case notice to two former senior executives of for their alleged interference in the rating action of and Dewan Housing Finance (DHFL), according to sources.


In the notice, has asked former managing director (MD) and chief executive officer (CEO) Rajesh Mokashi and chairman SB Mainak to explain why they should not be debarred from holding key managerial positions of market intermediaries and listed companies.



The move follows the forensic audit report of EY submitted to the regulator on February 11.


The report had found that the communication by and senior management with CARE’s former bosses on WhatsApp sought a delay in the ratings downgrade.


The audit report also highlights certain instances of holding back ratings so as to not change the assessments of these two entities.


According to the audit report, these two CARE bosses and a few staff members were involved in changing the adverse ratings since 2017. The ratings of these two entities were allegedly manipulated for three month to six months.


An email to remained unanswered.


This is the second showcause notice issued by the regulator in the matter. The first notice was issued to on February 12, where the regulator directed the board to conduct internal inquiry against these two executives and some others involved in the rating process.


The same day, Mainak resigned as chairman. However, sources said the regulator had asked the board of the ratings firm to sack him.


The audit was ordered after received multiple complaints, including by a whistleblower, about rating being influenced by the agency in certain companies.


CARE has been under lens for its alleged business and influential ratings in the Infrastructure Leasing & Financial Services (IL&FS) matter.


However, the fresh notices to CARE’s two former employees are not for IL&FS, said the sources.


Mokashi had stepped down as CEO & MD from the rating agency in December 2019, after he was sent on forced leave in July.


In the same month, Sebi had slapped a penalty of Rs 25 lakh each on ICRA, and India Ratings & Research.


The regulator had said default by IL&FS occurred due to “lethargic indifference and needless procrastination and laxity” of the rating agencies.


However, the market regulator is planning to review the Rs 25 lakh penalty, which had been imposed by its adjudicating officer on the three rating firms. The settlement amount could be revised up to four times higher.



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