Cracking the whip for their “lethargic indifference”, watchdog Sebi on Thursday slapped a penalty of Rs 25 lakh each on Icra, CARE, and India Ratings & Research in connection with lapses in assigning credit ratings to non-convertible debentures of IL&FS.

The crisis at diversified IL&FS, whose board was superseded by the government, came to light in September last year and since then, the company as well as related entities have come under the regulatory lens.

In three separate but similarly-worded orders, Sebi said the default by IL&FS occurred due to “lethargic indifference and needless procrastination and laxity” of the rating agencies.

The case relates to the default committed by IL&FS and its subsidiary IL&FS Financial Services on their obligations in respect of commercial papers (CP), inter-corporate deposits (ICDs) as well as on interest payments related to non-convertible debentures (NCDs).

According to Sebi, the exposure of IL&FS, at the relevant times, was critical to the financial stability as its share in the total exposure of banks to the NBFC sector was fairly high. There was substantial public interest involved in the affairs of IL&FS considering its importance for financial stability, it added.

The market regulator examined the role of the credit rating agencies (CRAs), including Icra Ltd, CARE Ratings Ltd, and India Ratings & Research Pvt Ltd, in assigning ratings to various NCDs of Infrastructure Leasing and Financial Services (IL&FS).