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RBI permits banks to use ratings of Brickwork Ratings subject to conditions

Published on July 10, 2024
Current Context: The Reserve Bank of India (RBI) has recently lifted restrictions on banks using ratings from Brickwork Ratings India Private Limited.
RBI permits banks to use ratings of Brickwork Ratings subject to conditions
  • After two years of forbidding fresh ratings due to regulatory concerns, banks can now utilize Brickwork Ratings’ assessments for calculating risk weights for capital adequacy purposes.
  • However, there are certain conditions attached to this permission:
    • New Rating Mandates: Banks can obtain ratings from Brickwork Ratings for bank loans not exceeding Rs 250 crore.
    • Existing Ratings Surveillance: Brickwork Ratings may undertake rating surveillance for existing ratings, regardless of the rated amount, for the residual tenure of such loans.
    • Larger Facilities: For existing ratings assigned to working capital facilities exceeding Rs 250 crore, surveillance will be conducted only until the next renewal of such facility by banks.

Question:

1 Under the new permission of RBI, banks can obtain fresh ratings from Brickwork Ratings for bank loans up to:

  • A) Rs 100 crore
  • B) Rs 250 crore
  • C) Rs 500 crore
  • D) D) Rs 1000 crore
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