RBI Issues Revised List of Accredited Credit Rating Agencies

• The Reserve Bank of India (RBI) on Monday issued the revised list of accredited credit rating agencies for the purpose of assigning risk weight to assets for capital adequacy purposes by the banks.On a review, banks are advised to use the ratings of the six domestic credit rating agencies for risk weighting their claims for capital adequacy purposes.
• The six credit rating agencies are-
• Acuite Ratings & Research Limited (Acuite),
• Credit Analysis and Research Limited (CARE);
• CRISIL Ratings Limited,
• ICRA Limited,
• India Ratings and Research Private Limited (India Ratings) and
• INFOMERICS Valuation and Rating Pvt Ltd.

What are Credit Rating agencies?

• CRA evaluates and assesses an individual’s or a company’s creditworthiness, means, these agencies consider a debtor’s income and credit lines to analyze the debtor’s ability to repay the debt or if there is any credit risk associated. The credit rating indicates if the borrower is worth trusting with the new loan.
  • In India, CRAs are regulated by the Securities and Exchange Board of India (SEBI) as per the SEBI Regulations, 1999 of the SEBI Act, 1992.
  • The creditworthiness of an individual or a company is decided based on the lending and borrowing transactions done in the past.
  • On October 31, 2022, SEBI issued norms regarding the standardization of rating scales used by CRAs.