RBI lists 6 rating agencies for banks’ capital adequacy purposes

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The Reserve Bank of India on Monday released a list of domestic credit rating agencies banks are advised to use for risk weighting their claims about capital adequacy.

The central bank listed Acuite Ratings & Research Limited, Credit Analysis and Research Limited (CARE), CRISIL Ratings Limited, ICRA Limited, India Ratings and Research Private Limited, and INFOMERICS Valuation and Rating Pvt Ltd.

The RBI’s list comes after the fiasco surrounding Brickworks Ratings India Private Limited, which had its licence cancelled by the Sebi in October 2022 for allegedly violating rules.

The Sebi directed the credit rating agency to wind down its operations within six months and barred it from taking any new clients.

In October, the RBI had also issued instructions with regard to how banks would approach the matter.

“Regulated Entities/ Market Participants were advised that in respect of ratings/credit evaluations required in terms of any guidelines issued by the Reserve Bank, no such fresh ratings/evaluations shall be obtained from Brickwork Ratings India Private Limited. Banks shall continue to be guided by the press release ibid till further review,” the RBI said.

Regulators had highlighted several violations by Brickwork, including failure to follow a proper rating process and exercise due diligence while providing ratings.

The Sebi inspected Brickwork for the periods April 2014 to September 2015 and April 2017 to September 2018, observing contraventions that led to initiation of separate adjudication proceedings against the agency.

Subsequently, the Sebi undertook a joint inspection with RBI in January 2020 of the records and documents of Brickwork, for the period from October 2018–November 2019 to ascertain any violation of credit rating agency rules.

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