RBI CHANGED THE NAME OF RATING SYMBOLS OF CREDIT RATING AGENCIES

Reserve Bank of India changed the rating symbols of different credit rating agencies. This step is taken due to the confusion about the rating system as different rating agencies give different rating to the same company with there analysis. So it is necessary now to put the credit rating agency name before the rating symbol. Reserve bank of India issued a circular no. 217 dated 13-10-2011 regarding this issue. Full circular is as under.

 RBI/2011-12/217
DBOD.No.BP.BC.39 /21.06.007/2011-12
October 13, 2011
The Chairman / CMD / MD / CEOAll Scheduled Commercial Banks
(excluding LABs and RRBs)
Dear Sir,
Prudential Guidelines on Capital Adequacy and Market Discipline - New Capital Adequacy Framework (NCAF) -Revision of Rating Symbols and Definitions of Credit Rating Agencies
Please refer to the Master Circular No. DBOD.No.BP.BC.11/21.06.001/2011-12 dated July 1, 2011 on 'Prudential Guidelines on Capital Adequacy and Market Discipline - New Capital Adequacy Framework (NCAF)' by which the consolidated prudential guidelines had been issued to banks on the captioned subject.

2. In terms of para 6 of the circular, four domestic credit rating agencies viz. CARE, CRISIL, FITCH India and ICRA have been accredited for the purpose of risk weighting the banks' claims for capital adequacy purposes. The long term and short term ratings issued by the chosen domestic credit rating agencies have been mapped to the appropriate risk weights applicable as per the Standardised Approach under the Basel II Framework.

3. SEBI has, vide its circular CIR/MIRSD/4/2011 dated June 15, 2011 on 'Standardisation of Rating Symbols and Definitions', instructed Credit Rating Agencies (CRAs) registered with SEBI to adopt common rating symbols and rating definitions, whichshall henceforth be used for the new ratings / reviews by the CRAs. Under the revised standardized system, there is no change in the long term rating symbols except that rating symbols will henceforth display the rating agency's name as a prefix. In case of short term ratings, a rating scale denoted by 'A' on a scale of '1' to '4' (i.e. A1, A2, A3 and A4) and 'D' has been prescribed. The four accredited CRAs, which are registered with SEBI, have therefore revised their rating symbols of long term and short term debt instruments. The new rating symbols of the chosen CRAs vis-à-vis their old rating symbols for long term and short term instruments are furnished in Annex for ready reference.

4. The aforesaid change in rating symbols and definitions however does not effect, in any manner, the rating methodology followed by the CRAs for rating such instruments and will have no bearing on the existing ratings assigned by the CRAs under the Basel-II framework.

5. In view of above, banks are advised that they should henceforth use the revised rating symbols of the credit rating agencies with the corresponding guidance in the master circular under reference for the purpose of assigning risk weights to the various exposures.

6. All other provisions regarding external credit ratings of the master circular remain unchanged.
Yours faithfully,
(Deepak Singhal)
Chief General Manager-in-charge

Annex
Revised Rating Symbols of CARE, CRISIL, FITCH and ICRA
CARE
Long-Term Debt instruments
Short-Term Debt instruments
Earlier Rating Symbol
Revised Rating Symbol
Existing Symbols
New Symbols
AAA
CARE AAA
PR-1
CARE A1
AA
CARE AA
PR-2
CARE A2
A
CARE A
PR-3
CARE A3
BBB
CARE BBB
PR-4
CARE A4
BB
CARE BB
PR-5
CARE D
B
CARE B

C
CARE C
D
CARE D
CRISIL
Long-Term Debt instruments
Long-Term Debt instruments
Revised Rating Symbol
Revised Rating Symbol
Earlier Rating Symbol
Revised Rating Symbol
AAA
CRISIL AAA
P1
CRISIL A1
AA
CRISIL AA
P2
CRISIL A2
A
CRISIL A
P3
CRISIL A3
BBB
CRISIL BBB
P4
CRISIL A4
BB
CRISIL BB
P5
CRISIL D
B
CRISIL B

C
CRISIL C
D
CRISIL D
FITCH INDIA
Long-Term Debt instruments
Short-Term Debt instruments
Earlier Rating Symbol
Revised Rating Symbol
Earlier Rating Symbol
Revised Rating Symbol
AAA (ind)
Fitch AAA
F1(ind)
Fitch A1
AA (ind)
Fitch AA
F2(ind)
Fitch A2
A (ind)
Fitch A
F3 (ind)
Fitch A3
BBB(ind)
Fitch BBB
F4(ind)
Fitch A4
BB(ind)
Fitch BB
F5(ind)
Fitch D
B(ind)
Fitch B

C(ind)
Fitch C
D
Fitch D
ICRA
Long-Term Debt instruments
Short-Term Debt instruments
Earlier Rating Symbol
Revised Rating Symbol
Earlier Rating Symbol
Revised Rating Symbol
LAAA
ICRA AAA
A1
ICRA A1
LAA
ICRA AA
A2
ICRA A2
LA
ICRA A
A3
ICRA A3
LBBB
ICRA BBB
A4
ICRA A4
LBB
ICRA BB
A5
ICRA D
LB
ICRA B

LC
ICRA C
LD
ICRA D

Share on Google Plus

About Nitin Aggarwal

    Blogger Comment
    Facebook Comment