The officials behind the now defunct Lanka Rating Agency (LRA) have sent a fresh application to the Securities and Exchange Commission (SEC) requesting permission to re-enter credit rating space in the country, Mirror Business learns.
LRA’s licence was not renewed by the SEC when it came up for renewal on June 30, 2015.
LRA was at the centre of a rating shopping controversy, after several firms, which were downgraded by Fitch over rising debt, went to LRA.
The SEC also spotted a serious case of conflict of interest when LRA went ahead and rated a debenture issue by a broadcasting company, despite the two companies having common directors.
LRA had issued ratings for little over 30 firms and majority of them were finance companies.
In Sri Lanka, it requires a minimum capital of Rs.35 million to start a rating firm but the applicant has to meet a stringent set of regulatory requirements to open shop, which effectively acts as an entry barrier.
Sri Lanka currently has two rating agencies—Fitch Ratings Lanka Limited and ICRA Rating Lanka Limited.