(Bloomberg) --

China’s central bank has started to seek public feedback on a policy document to overhaul the country’s credit rating industry, following a series of defaults by state-backed firms.

The People’s Bank of China, which posted a draft of the new regulation on its website on Sunday, said in a notice that the public has until April 12 to provide their feedback on the policy aimed at strengthening supervison of domestic credit rating companies and improving their independence and quality control.

China’s ratings firms have long been criticized for issuing inflated grades and for being slow to detect risks from borrowers. In China, about 96% of onshore credit ratings are the equivalent of investment grade.

The Chinese rating industry has attracted renewed scrutiny since a slew of AAA-rated defaults roiled the domestic credit market late last year. In December, regulators imposed a three-month ban on new debt-grading business for China Chengxin and Golden Credit Rating due to irregularities such as insufficient risk analysis and improper rating models.

The policy document, jointly issued with the National Development and Reform Commission, Ministry of Finance, China Banking and Insurance Regulatory Commission and China Securities Regulatory Commission, calls for setting up unified standards for domestic rating agencies and punishing violators.

Rating firms are also encouraged to use big data and artificial intelligence to identify financial risks, according to the document.

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