What changed
Previously, only four domestic credit rating agencies (CARE, CRISIL, FITCH India, ICRA) were accredited for risk weighting banks' claims. RBI has now added Brickwork Ratings India Pvt. Ltd. as an additional eligible agency. The rating-risk weight mapping for Brickwork's ratings will be identical to that of the other four agencies.
What it means for you
Banks gain more flexibility in sourcing credit ratings for capital adequacy calculations, potentially reducing concentration risk from relying on fewer agencies. This may also increase competition among rating agencies, possibly leading to more timely and diverse credit assessments. Lenders should update their internal systems to include Brickwork's ratings in risk-weighting processes.
What you must do
- Update internal capital adequacy systems to accept Brickwork's long-term and short-term ratings for risk weighting.
- Ensure the rating-risk weight mapping for Brickwork matches the existing mapping used for other accredited agencies.
- Inform relevant credit and risk management teams about the new eligible rating agency.
- Review any existing exposures rated by Brickwork to confirm appropriate capital treatment.
Who it affects
All scheduled commercial banks (excluding Local Area Banks and RRBs), Credit risk management teams, Capital adequacy and Basel II compliance teams
Can we use Brickwork ratings for all types of claims?
Yes, for risk weighting claims for capital adequacy purposes under the Standardised Approach of Basel II, subject to the same rating-risk weight mapping as other accredited agencies.
Does this change the risk weights for existing ratings?
No. The risk weights for Brickwork's ratings are mapped identically to those of CARE, CRISIL, FITCH India, and ICRA. Only the list of eligible agencies has expanded.