SEBI Credit Risk-o-Meter Proposal for Debt Securities
Why in the news
The market regulator SEBI floated a proposal to show the credit risk of debt instruments through a colour-based meter instead of only letter ratings.
Key facts
- Proposer: SEBI.
- Tool: colour-coded Credit Risk-o-Meter, mandatory for debt securities.
- Levels: 6 visual risk levels.
- Scale: from minimal credit risk to a very high default possibility.
| Aspect | Proposal |
|---|---|
| Applies to | Debt securities |
| Input | Existing ratings (AAA, AA+, BBB-) |
| Output | Six colour-coded levels |
| Purpose | Easier comparison for investors |
Significance
A simple visual scale should help ordinary investors judge default risk without decoding rating symbols.
Exam angle
- Regulator: SEBI, securities market.
- Number of levels in the proposed meter: six.
- Related term: credit rating.