RBI revises minimum rating for NCDs up to one year
Current · Source: Reserve Bank of India · RBI/2011-12/157 · issued 23 Aug 2011 · ~1 min read
Quick answerRBI has aligned NCD rating requirements with SEBI's standardised symbols, setting the minimum credit rating for NCDs of up to one year maturity at 'A2' as per SEBI definitions, effective August 23, 2011.
The rule, in the simplest words
If a bank wants to sell a short-term NCD (a type of loan certificate that lasts up to one year), it must get a credit rating (a score from a company that checks if the bank can pay back) of at least 'A2' from SEBI (the market watchdog).
This new rule started on August 23, 2011, and replaces the old rating rule from 2010.
The 'A2' rating uses SEBI's standard symbols (the same labels for all rating agencies) so everyone knows exactly what the rating means.
Banks and other market players must check that every new short-term NCD they issue has this minimum 'A2' rating.
How it plays out — a real example
A credit & lending officer in Indore is preparing to issue a 6-month NCD to raise funds for new branches. She checks the RBI circular and sees that the minimum rating is now 'A2' under SEBI's system. She calls the treasury team to confirm the NCD has an 'A2' rating from a SEBI-recognized agency before proceeding, ensuring the bank follows the new rule from August 23, 2011.
What changed
The minimum credit rating for issuing Non-Convertible Debentures (NCDs) with maturity up to one year has been revised to 'A2', based on SEBI's standardised rating symbols and definitions. This replaces the earlier rating requirement under the 2010 Directions.
What it means for you
Banks and market participants issuing short-term NCDs must now ensure the instrument carries at least an 'A2' rating from SEBI-recognised agencies. This aligns regulatory standards with SEBI's framework, reducing ambiguity and ensuring consistency in credit quality assessment for investors.
What you must do
Update internal NCD issuance policies to reflect the new minimum rating of 'A2' for maturities up to one year.
Verify that all new NCD issuances comply with SEBI's standardised rating symbols and definitions.
Review existing NCD portfolios to ensure compliance with the amended Directions effective August 23, 2011.
Communicate the change to relevant treasury and compliance teams for immediate implementation.
Who it affects
Banks issuing NCDs, Market participants dealing in short-term NCDs, Credit rating agencies, Investors in NCDs
❓ Common questions
Regulatory timeline
Stated effective dateeffective August 23, 2011
Decoded by BankPulse2026-06-18 23:40 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
What is the new minimum rating for NCDs with maturity up to one year?
The minimum credit rating is now 'A2' as per SEBI's standardised rating symbols and definitions, effective from August 23, 2011.
Does this amendment affect NCDs with maturity longer than one year?
No, this amendment specifically applies to NCDs of maturity up to one year, as covered under the 2010 Directions.
Why did RBI make this change?
To align with SEBI's standardisation of rating symbols and definitions, ensuring consistency and clarity in credit ratings for short-term NCDs.
📜 Read the original circular — full text as issued by RBI
RBI/2011-12/157
IDMD.PCD. 08/14.03.03/2011-12
August 23, 2011
All Market Participants
Dear Sirs,
Issuance of Non-Convertible Debentures (NCDs)-Minimum Rating of NCDs
A reference is invited to the Issuance of Non-Convertible Debentures (Reserve Bank) Directions, 2010 dated June 23, 2010 issued vide circular IDMD.DOD.10/11.01.01(A)/2009-10 of same date and the amendment Directions issued on December 06, 2010 vide circular IDMD.PCD.24/14.03.03./2010-11 of same date covering the regulation of NCDs of maturity up to one year.
2. In view of the standardisation of rating symbols and definitions for credit rating agencies by Securities Exchange Board of India (SEBI), the Reserve Bank of India has issued an amendment Direction, i.e., Issuance of Non-Convertible Debentures (Reserve Bank) (Amendment) Directions, 2011, inter alia, revising the symbol of minimum rating required for issuing NCDs of maturity up to one year.
3. The amendment Directions comes into immediate effect. A copy of the Directions is enclosed .
Yours faithfully,
(K. K. Vohra)
Chief General Manager
RESERVE BANK OF INDIA
INTERNAL DEBT MANAGEMENT DEPARTMENT
CENTRAL OFFICE
MUMBAI
Issuance of Non-Convertible Debentures (Reserve Bank)
(Amendment) Directions, 2011
IDMD.PCD.07/ED (RG) - 2011 dated August 23, 2011
In exercise of its powers conferred under sections 45K, 45L and 45W of the Reserve Bank of India Act, 1934 and of all the powers enabling it in this behalf, and in partial modification of the Issuance of Non-Convertible Debentures (Reserve Bank) Directions, 2010 dated June 23, 2010, the Reserve Bank hereby notifies as follows: -
1. That the paragraph 4.2 of the Non-Convertible Debentures (Reserve Bank) Directions 2010 dated June 23, 2010 (hereinafter referred to as the ‘said Directions’) is hereby amended as under:
4.2 The minimum credit rating shall be ‘A2’ [As per rating symbol and definition prescribed by Securities and Exchange Board of India (SEBI)].
2. These Directions may be referred to as the Issuance of Non-Convertible Debentures (Reserve Bank) (Amendment) Directions, 2011 and shall be effective from today, i.e., August 23, 2011.
(R. Gandhi)
Executive Director
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2011-12/157 · issued 23 Aug 2011. The plain-English explanation above is BankPulse’s own independent summary.
Example: if you are a Compliance officer at a bank this circular applies to (Banks issuing NCDs, Market participants dealing in short-term NCDs, Credit rating agencies, Investors in NCDs), your first concrete step on “RBI revises minimum rating for NCDs up to one year” is: “Update internal NCD issuance policies to reflect the new minimum rating of 'A2' for maturities up to one year.” (RBI issued this 23 Aug 2011).
Circular: RBI/2011-12/157 -- RBI revises minimum rating for NCDs up to one year
Issued: 23 Aug 2011
Action required: Update internal NCD issuance policies to reflect the new minimum rating of 'A2' for maturities up to one year.
Action required: Verify that all new NCD issuances comply with SEBI's standardised rating symbols and definitions.
Action required: Review existing NCD portfolios to ensure compliance with the amended Directions effective August 23, 2011.
Action required: Communicate the change to relevant treasury and compliance teams for immediate implementation.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
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BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=6681&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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