October 5, 2022
  • October 5, 2022
  • Home
  • Company reviews
  • Rating companies: rating companies have 6 months to withdraw, drop in “strengthened” loan ratings

Rating companies: rating companies have 6 months to withdraw, drop in “strengthened” loan ratings

By on August 3, 2022 0

If a downgrade is unacceptable to the borrower, agencies may withdraw the rating once the withdrawal is requested by the borrower.

Synopsis

RBI had previously expressed reservations about “credit enhancement” mechanisms such as the “comfort letter” and “commitment letter” given by promoters or the parent company to the borrowing entity, as well as the media such as the pledge of shares. Companies reduce their cost of debt, often significantly, through these structures.

Mumbai: The Reserve Bank of India (RBI) has given credit rating companies six months to downgrade or withdraw the ratings of bank loans that have been backed by agreements the regulator considers to be “diluted or non-prudent backing structures “. With that, hundreds of businesses are expected to see their cost of borrowing rise and their bank loan ratings plummet by at least two notches by early 2023. The central bank made its views known in a

  • FONT SIZE
  • TO REGISTER
  • TO PRINT
  • COMMENT

Why ?

  • Exclusive Economic Times stories, editorials and expert opinions in more than 20 sectors

  • Stock analysis. Market research. Industry trends on more than 4000 actions

  • own experience with
    Minimal Ads

  • Comment and engage with the ET Prime community

  • Exclusive invitations to Virtual events with industry leaders

  • A trusted team of Journalists and analysts who can best filter the signal from the noise