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SEBI Recently Launches PaRRVA Framework to Curb Misleading Performance Claims in Financial Advertisements.

Banking & Finance | Dated: 08 Apr 2025

In April 2025, the Securities and Exchange Board of India (SEBI), headquartered in Mumbai, Maharashtra, released an operational framework for a performance validation agency named Past Risk and Return Verification Agency (PaRRVA). The framework is designed to curb misleading claims regarding past financial product performance in advertisements issued by Research Analysts (RAs), Investment Advisors (IAs), and Stock Brokers.

🎯 Key Highlights:

- According to SEBI’s circular, a Credit Rating Agency (CRA) can be recognised as a PaRRVA under Regulation 12A of the SEBI (Credit Rating Agencies) Regulations, 1999, read with Regulation 16E of the Intermediaries Regulations.
- Additionally, such CRA, in collaboration with a recognised Stock Exchange (SE), will function as a PaRRVA Data Centre (PDC).

💡 Other Important Facts:

(i) To function as a Past Risk and Return Verification Agency (PaRRVA), a Credit Rating Agency (CRA) must meet specific criteria. These include a minimum of 15 years of operational experience, a net worth of at least ₹100 crore, and a robust investor grievance redressal mechanism with an Online Dispute Resolution (ODR) system. Additionally, the CRA must have provided ratings to at least 250 issuers of debt securities.
(ii) For a recognised Stock Exchange (SE) to serve as a PaRRVA Data Centre (PDC), it must also have a minimum of 15 years of experience, a net worth of ₹200 crore, and a nationwide presence through terminals.
(iii) The SE must further ensure an effective investor grievance redressal system, including an ODR mechanism, to qualify under SEBI’s operational framework.

📚 Test Your Knowledge:

What is the name of the new performance validation agency framework recently introduced by SEBI?

Correct Answer: PaRRVA

🚀 Quick Recap:

About SEBI

Chairperson: Tuhin Kanta Pandey
Headquarter : Mumbai