What Is a No Default Statement? The Monthly NDS

A no default statement is the smallest and most consequential document in India's credit rating machinery: a one page monthly confirmation from an issuer to its rating agency that it did not miss a debt payment last month. SEBI mandates it so that a default is recognised on a monthly clock rather than whenever the next surveillance review happens to fall. Three missed statements in a row is enough to move a rating out of the ratings universe and into Issuer Not Cooperating.

Why does SEBI require a no default statement?

Because surveillance alone is too slow. A rating agency reviews a rating periodically, but a payment default happens on a specific date, and the market needs to learn about it in days rather than quarters. SEBI's answer is to put the confirmation on a monthly cycle: paragraph 9.3.1 of the CRA master circular requires every CRA to seek a no default statement from the issuer at the end of each month, and the issuer to provide it on the first working day of the next month.

The statement is a negative confirmation. The issuer is not reporting what it paid, it is certifying that nothing was late.

What does the statement actually cover?

More than the rated bond. SEBI's standard template at Annexure 12 of the master circular asks the issuer to confirm, item by item:

• No overdues or default on listed debt obligations.
• No overdues or default on unlisted debt obligations.
• No instance of delay in servicing listed debt in the month just ended.
• No instance of delay in servicing unlisted debt in the month just ended.
• No instance of delay in servicing debt obligations guaranteed by the issuer.
• No overdues or default on interest or instalment obligations on loans from banks and financial institutions continuing beyond 30 days.
• No overdues or default on revolving facilities such as cash credit continuing beyond 30 days.
• No overdraw of the sanctioned drawing power for more than 30 consecutive days on facilities with no scheduled repayment date.

Where any of those fails, the template requires a table: name of the obligation, nature, date of default, current amount in default, amount to be paid, actual date of payment.

The bank loan lines matter for a reader of exchange filings. A company can be current on its listed bonds and still be reporting a 30 day overdue on a cash credit facility inside the same statement.

What happens when an issuer stops sending it?

The statement becomes evidence by its absence. SEBI sets a uniform practice: three consecutive months of non-submission of the NDS, or an inability to validate timely debt servicing through other sources, is a ground for migrating the rating to Issuer Not Cooperating, and the CRA must tag the rating as INC within 5 working days of that third month. The agency may act sooner if its judgement calls for it.

Can an investor read the NDS itself?

No. The NDS is a submission from the issuer to its rating agencies, not a public filing, and neither the exchange nor the agency publishes the statement. What becomes public is what it triggers: a rating action, an INC tag, or a press release. So the practical route is to read the rating agency's press release and the company's own exchange disclosure of a rating revision, and to treat an INC migration as the visible end of an invisible three month silence.

What the NDS does not tell you

It is a monthly snapshot of payment behaviour, nothing more. It carries no view on the business, no covenant testing, and no forward statement. A clean NDS for August says August's payments were made on time. It says nothing about September, and it is not a credit rating in itself.

So a no default statement is a payment-behaviour confirmation on a monthly clock, and the most useful thing about it is what happens when it stops arriving.

Flock reports the filings themselves, each one dated and linked to its source. What a rating action means for your money is your call to make. Not investment advice.