ZCRA, a Credit Rating Agency which were granted certificate from SEBI is interested in carrying out Bill Discounting business. Can it do so, state the relevant provisions in this regard.

Can ZCRA, a Credit Rating Agency, carry out Bill Discounting Business? No, ZCRA, a Credit Rating Agency (CRA) granted a certificate from SEBI, cannot carry out the business of bill discounting. Relevant Provisions: As per Regulation 9(f) of the SEBI (Credit Rating Agencies) Regulations, 1999 (as amended by SEBI (Credit Rating Agencies) (Second Amendment) Regulations, 2018), it is explicitly stated that: "A Credit Rating Agency shall not carry out any activity other than the rating of securities offered by way of public or sight issue." This provision clearly restricts the activities of a CRA to only rating securities. Bill discounting is a financial activity that involves providing short-term finance against trade receivables, which is not a rating activity. Therefore, engaging in bill discounting would be a direct violation of the SEBI (Credit Rating Agencies) Regulations.