Mpbf Freedom Opens New Vistas For Rating Firms

The new found freedom of banks in arriving at the maximum permissible bank finance (MPBF) for their corporate clients has thrown open new vistas for rating agencies and management consultancies to provide them advisory services for arriving at optimum levels of MPBF.

Rating agencies confirmed that the credit policy had thrown open new vistas for their business. However, they hastened to add that the switch over to the new modes of risk assessment would be gradua.

Investment Information and Credit Rating Agency (ICRA), which had tied up with Moody's recently, has started offering a new service called Banks Lines of Credit Rating Services for banks and financial institutions to arrive at an optimum MPBF.

 

R. Raghuttama Rao, general manager, ICRA, said some public sector banks were already talking to his agency for their lending decisions. He added that ICRA's tie-up with Financial Proformas Inc., a 100 per cent subsidiary of Moody's, would help in assessing credit risks on behalf of the banks Rao said ICRA would not make any recommendations on lending but would provide independent opinion on the credit quality of a corporate borrower.

Credit Rating Information Services of India Ltd (Crisil), too, had developed bank loan rating services which could help banks with credit decisions According to a Crisil official, N. Sudhakar, bank's loan rating services could also help the borrowing companies in accessing funds.

Though the rating agencies are gearing up to grab the new business, the banks are still conservative about the new found freedom.

A top official of Bank of India (BoI)said, Banks have the requisite expertise and experience in assessing the working capital requirements of their clients.