Rating agencies seek harmonisation of norms for debentures and loans

Rating agencies are seeking harmonisation of norms by the Reserve Bank of India (RBI) and Securities and Exchange Board of India (Sebi) for instruments like debentures and loans, especially where ratings are based on enhanced external support.

The purpose of such a mechanism is to get better ratings and reduce cost of funds for an entity floating instruments.

Recently, there was communication from the RBI that dealt with issue ratings assigned to financial instruments based on structures. These included letters of comfort and undertaking, banking sources said.

RBI has cautioned on taking into account such support mechanisms. The assessment for ratings of the