The leading rating agency Fitch expressed its views on recent search conducted by Enforcement Directorate at Manappuram Finance highlighting corporate governance challenges that can arise in emerging markets such as India. As per Fitch, 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. Such searches are relatively rare and can flag potential governance risks, but the activities the company has identified thus far as being involved are publicly known and Fitch has already factored them into its rating, "including our assessment of the company's corporate governance". Nonetheless, the prevalence of founder- and family-driven corporations can concentrate decision-making, and alignment of interests among key company decision-makers may be skewed in favour of equity-holders.
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