India Ratings revokes short-term issuer rating of 25 financial institutions

The ratings agency said that it has withdrawn the Short-Term Issuer Rating of Issuers "in line with regulatory requirements."(Representative image)

India Ratings has withdrawn short-term issuer rating (A1+) of 25 financial institutions, including banks and non-banking financial companies (NBFC).

IndusInd Bank, in a regulatory filing, said that the agency has called off its A1+ ratings. The other financial institutions include banks like HDFC Bank, Axis Bank, Bank of Baroda, Punjab National Bank, Kotak Mahindra Bank among others.

The list includes NBFCs like Shriram Finance Limited, Infrastructure Leasing & Financial Services Limited, Bajaj Housing Finance Limited and others.

The ratings agency said that it has withdrawn the Short-Term Issuer Rating of Issuers "in line with regulatory requirements."

"Short-Term Issuer Rating withdrawal is in compliance with the Securities and Exchange Board of India (SEBI) circular which requires credit rating agencies to use standardized rating scales and symbol," it added.

The agency also informed that all other outstanding ratings will remain unaffected including the ratings on short term instruments.

Regulatory norms

SEBI, in August 2022, issued rules that credit rating agencies (CRAs) have to follow standardise use of rating scales. The regulator, said that CRAs analyse and rate financial instruments, primarily looking at the debt side, and expose the risks based on the ratings they accord to the instruments. But with this, ratings are often filled with jargon and are difficult for a person to read and understand.

The norms also include details like what ‘rating outlook’ indicates. The regulator said: "CRA’s view on the expected direction of the rating movement in the near to medium term, whereas a ‘rating watch’ indicates a CRA’s view on the expected direction of the rating movement in the short term."