What changed
Previously, banks were barred from obtaining fresh ratings from Brickwork Ratings India for any regulatory purpose. Now, RBI has permitted its use for capital adequacy risk-weighting, subject to a Rs.250 crore cap on fresh rating mandates. Existing ratings can be monitored for the full loan tenure, but working capital facilities above Rs.250 crore only until next renewal.
What it means for you
Banks can now leverage Brickwork Ratings for capital adequacy calculations, potentially easing concentration risk among other CRAs. The Rs.250 crore cap limits exposure to smaller loans, so large exposures still need other accredited agencies. Existing loan portfolios with Brickwork ratings remain valid, reducing immediate disruption.
What you must do
- Update internal policies to allow Brickwork Ratings for fresh loan ratings up to Rs.250 crore for capital adequacy purposes.
- Ensure existing Brickwork-rated loans above Rs.250 crore (especially working capital) have surveillance only until next renewal.
- Communicate with credit teams to align risk-weighting processes with this partial reinstatement.
- Monitor RBI circulars for any further changes to the list of eligible credit rating agencies.
Who it affects
All Scheduled Commercial Banks including Small Finance Banks, Credit risk and capital adequacy teams, Loan origination and portfolio management departments
Can we use Brickwork Ratings for any loan amount now?
No. For fresh mandates, the loan amount must not exceed Rs.250 crore. Existing ratings can continue surveillance regardless of amount, but working capital above Rs.250 crore only until next renewal.
Does this apply to all regulatory purposes or just capital adequacy?
This circular specifically permits use for risk-weighting claims for capital adequacy. Other regulatory requirements remain subject to the earlier ban unless separately clarified.
What about loans already rated by Brickwork before the ban?
Existing ratings can continue surveillance for the full residual tenure. For working capital facilities above Rs.250 crore, surveillance is allowed only until the next renewal by the bank.