RBI raises concerns about companies shopping around for favourable ratings

Non-disclosure of indicative ratings by agencies makes it difficult to identify such instances, according to the FSR

The Reserve Bank of India’s (RBI’s) Financial Stability Report (FSR) has raised concerns about rating shopping among companies.

This comes against the backdrop of instances of indicative ratings given by agencies, for which there are no written agreements. The indicative ratings are also not disclosed on the company websites.

“Since such ‘indicative ratings’ are not disclosed by CRAs (credit rating agencies) on their websites, it becomes difficult to identify instances of possible rating shopping,” said the FSR, a bi-annual report released by the RBI on Friday.  “The issue of possible rating shopping behaviour on the part of obligors clearly requires