Fitch Ratings on May 10 said the recent search by the Enforcement Directorate at gold-backed lender Manappuram Finance highlights corporate governance challenges that can arise in emerging markets such as India.
"Such searches need not lead to further regulatory action, but investigations raise reputational risk that could tarnish a lender's business prospects and constrict funding access due to reduced market confidence — potentially affecting an issuer's credit profile — even if no wrongdoing is identified," Fitch added.
The rating agency said Manappuram Finance Limited has disclosed that the Enforcement Directorate's search on its premises pertained to legacy non-compliant activities at its branches up until 2012.
