Context:
The Reserve Bank of India (RBI) has amended its Basel III Capital Regulations to broaden the credit rating agencies banks can use for assessing risk weights on claims involving non-resident corporates located in International Financial Services Centres (IFSCs).
Key Highlights:
- New Rating Agency Permitted:
- Scheduled Commercial Banks (excluding Local Area Banks, Payments Banks, and Regional Rural Banks) can now use CareEdge Global IFSC Ltd ratings for credit risk assessment.
- Previous Status:
- Banks were limited to using international ratings from Fitch, Moody’s, and Standard & Poor’s.
- Purpose of Amendment:
- To enhance credit risk assessment options under the Basel III standardized approach for banks with international exposures, particularly in IFSCs.
- RBI-Specified Risk Weight Mapping for CareEdge Global IFSC Ltd:
- AAA – 20%
- AA – 30%
- A – 50%
- BBB – 100%
- BB & below – 150%
