Basel II norms bring in bonanza for rating agencies

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Mumbai, Jun 5: The implementation of Basel II has provided a huge bonanza for the rating agencies in the country. All the four agencies Crisil, ICRA, Care and Fitch have witnessed substantial acceleration in their core activities since the Reserve Bank of India (RBI) has asked Indian banks to go for ratings of their loans by an independent rating agency.

“With Basel II kicking off, there has been a significant rise in our activities. Corporates have rushed in to get themselves rated with the agency. We can say that the numbers have almost doubled since the RBI had come out with the notification. Infact, we saw the numbers doubling at the end of the first year itself, since the notification was out,” pointed out Amit Tandon, MD of Fitch Ratings.

Fitch has seen various corporates like Tata Steel, Jindal Steel, Indian Oil and many others coming forward to get themselves rated.

“The process of assigning risk weightage to the lines of credit linked to rating by external agencies for the purpose of capital allocation by the banks has increased the coverage by the credit rating agencies. As a result many more entities are now submitting themselves to the discipline of credit rating and the process of rigorous due diligence and analytical scrutiny,” explained P K Choudhury, vice chairman & group CEO with ICRA Ltd.

Meanwhile, Crisil too has seen a significant rise in their activities. Roopa Kudva, managing director CEO with Crisil, said that 250 corporates have come ahead to get themselves rate, for Basel II.

“We have also ramped up our capability size, manpower, technology and knowledge management systems so as to rate corporates effectively. In the process, large innovation has also been used. Investments both in terms of people as well as money have increased,” Kudva said.