Mubasher: Chinese securities regulator and a supervisory entity under the People's Bank of China (PBOC) punished Dagong Global Credit Rating, one of the largest debt rating agencies in the country.

Dagong, one of the largest bond rating firms in China, would be banned from operating in new securities rating for a year and would not be allowed to replace senior management during the period, the China Securities Regulatory Commission (CSRC) announced on Friday.

The CSRC also criticised the company’s poor internal management and unqualified assessment committee and missing modelling data.

The ban came after the National Association of Financial Market Institutional Investors (NAFMII), an official industry group that operates under PBOC, decided to suspend Dagong’s business in debt-financing instruments for non-financial companies for one year.

After investigating Dagong’s activities, NAFMII said that the company had given false statements and information.

“Credit ratings agencies providing consulting services to companies seeking ratings seriously deviates from the principle of independence, and is prohibited by the relevant regulations of the interbank market,” NAFMII said in the statement.

Both entities also said that Dagong offered consultation services to companies that it also issued credit ratings for.

These moves echoed Beijing’s growing concerns about credit risks at a time when the world’s largest second economy grew at a slower pace.