RBI rating rules split local credit agencies, smaller firms warn of business hit
Agarwal, a former senior director at India Ratings, said that the RBI circular is also likely to discourage rating shopping by borrowers, as the historical performance of the rating agency could directly influence the capital treatment of exposures and, consequently, the cost and availability of credit. “Overall, the move is expected to strengthen risk sensitivity in the banking system and improve the alignment between regulatory capital and underlying credit risk,” he said.
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