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C Risk Management Credit Rating
What is a credit rating in the context of bank lending?
A credit rating is a systematic assessment of a borrower's creditworthiness, expressing the likelihood of default on financial obligations. It is assigned by internal or external rating agencies based on quantitative and qualitative factors.
What is the minimum external credit rating required for a corporate exposure to attract a 20% risk weight under RBI's Standardised Approach?
AAA or AA rating from a SEBI-recognised credit rating agency.
Which Indian regulatory body mandates the use of external credit ratings for bank lending under the Basel framework?
The Reserve Bank of India (RBI) mandates the use of external credit ratings issued by SEBI-accredited Credit Rating Agencies (CRAs) for capital adequacy computation under the Standardised Approach of Basel II/III.
What is the difference between 'investment grade' and 'speculative grade' credit ratings?
Investment grade (BBB- and above) indicates lower default risk than speculative grade.
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