By doing this, SEBI expects to resolve the issue of rating shopping, as per which a company did not disclose an adverse rating and decided instead to seek a favourable rating from another credit rating agency.

A company will also not be be allowed to get a rating from a credit rating agency which is an associate firm of the company concerned. The minimum networth prescribed for a company to float a credit rating agency has been fixed at Rs 100 crore.

The committee has finalised its guidelines in its meeting held on Wednesday and the committee head, Vijay Ranjan, SEBI executive director will now draft the report and submit it to the SEBI chairman, who would in turn, take it to the SEBI board for its consent.

Most of the recommendations had been finalised at the last meeting held on July 30, and the onlyissue to be finalised was about how to prevent rating shopping by companies.

``Even though companies are going to find getting two sets of ratings somewhat expensive, this is the only way in which rating shopping could have been prevented as now the investor will get a fair picture of the company's health as perceived by a credit rating agency,'' said a committee member. The dual rating has been prescribed with an eye on the government's decision to allow provident funds to invest in private sector securities which have been rated by at least two credit rating agencies.

``By doing this, most of the companies would be able to attract investments from these funds,'' said the member.

The committee is also recommending that the meaning of the rating should be provided alongside the rating symbol. In addition to this, the rating agency must also disclose the rationale for awarding such a rating as this could vary from one rating agency to another.

``The symbol by itself does not convey anything to aninvestor. Therefore, the meaning of the symbol as well the rationale adopted in giving that rating should be given alongside. A classical example of this was the recent ratings of plantation companies, where rating symbols were displayed but not one of them conveyed the true picture that none of these rating agencies were worthy of investment,'' said a committee member.

The committee has also recommended that credit rating agencies should continuously monitor the ratings assigned by them. ``There should be a periodic review of all the ratings published,'' said the member.