Credit Rating Advisory for Bank Borrowers

Overview

Once a company’s bank borrowing grows past a point, the bank starts caring about an external credit rating — because the rating decides how much regulatory capital the bank must hold against your loan. Under RBI’s Basel III standardised approach, a well-rated corporate exposure carries a far lower risk weight than a poorly rated one (20% at AAA against 150% at BBB and below, with unrated at 100%), and capital is the bank’s cost. That is the machinery behind a fact every borrower feels: better-rated borrowers get keener pricing, and a single notch can move your spread.

The rating itself can only come from a SEBI-registered credit rating agency — the long-standing names are CRISIL, ICRA, CareEdge, India Ratings, Acuité, Infomerics and Brickwork, with newer agencies registered since. By regulation the rating decision is taken exclusively by the agency’s own rating committee; nobody outside it, including us, can assign or influence a rating. What an independent adviser legitimately does — and what SEBI’s code of conduct actually anticipates, since it bars the agencies themselves from selling advisory to entities they rate — is prepare the borrower’s side: the information the committee reads, the projections it stress-tests, and the management answers it hears.

That preparation is worth doing properly, because rating agencies work with what you give them. The process runs on your audited financials, an information memorandum, management meetings and query rounds — and after the initial rating, an annual surveillance cycle where the agency reviews and can revise the rating for as long as the facility runs. A file that is complete, internally consistent and honestly positioned is read differently from a shoebox of statements, and stopping cooperation is now expensive in its own right: under RBI’s framework a borrower tagged “Issuer Not Cooperating” attracts penal risk weights that escalate the longer the silence lasts, which your bank notices.

This matters more from April 2027, not less. RBI’s new standardised-approach directions (published April 2026, effective 1 April 2027) recalibrate the risk-weight table — lowering the capital banks hold against AA, BBB and BB rated exposures, a shift CareEdge Ratings estimates will release over ₹58,000 crore of bank capital. The gap between what a rated and an unrated borrower costs the bank is widening, which means the conversation your bank is having with you about getting rated is not going away.

Who it’s for

• Companies whose bank has asked for an external rating as a condition of a new facility, an enhancement or a renewal
• SME and mid-market borrowers approaching working-capital or term-debt sizes where bank credit policy expects a rating
• VCFO and compliance clients growing into bank debt who have never been through a rating exercise
• Rated borrowers facing annual surveillance who want the review prepared rather than endured
• Borrowers tagged or at risk of “Issuer Not Cooperating” who need to re-engage with their agency before penal risk weights escalate

Eligibility & requirements

• The rating is assigned by a SEBI-registered credit rating agency and by its rating committee alone — an adviser prepares the file, never the outcome
• The agency will rely primarily on audited financial statements, so the audit trail and the numbers in the memorandum must reconcile
• A mandatory written agreement with the agency commits you to periodic review for the life of the instrument and to providing true, adequate and timely information
• Annual surveillance is not optional: the agency monitors continuously and reviews periodically, and non-cooperation itself now carries regulatory consequences for how banks must treat your exposure
• For a single debt-securities issue of ₹100 crore or more, SEBI requires ratings from at least two agencies

How CapEasy handles it

1. Pre-rating assessment — we read your financials the way a rating analyst will, and tell you honestly what band you are walking into and what is dragging on it, before you sign the agency mandate
2. Agency selection and mandate — which SEBI-registered agency fits your sector and instrument, and what its published process asks of you
3. Information memorandum — the business, the industry position, the management, the financial story and the funding plan, built to answer the committee’s standard questions before they are asked
4. Financial projections that survive scrutiny — assumptions documented, downside cases included, reconciled to the audited statements the agency will anchor on
5. Management-meeting preparation — the rating meeting is a real examination, and rehearsed, consistent answers matter
6. Query-round handling — agencies come back with questions; slow or inconsistent responses read as weakness, so we run the responses with you
7. Surveillance discipline — a calendar and an information pack for the annual review, so the renewal is a routine event rather than a scramble, and “Issuer Not Cooperating” never happens by accident

Documents you’ll typically need

• Three years of audited financial statements, plus provisional financials for the current year
• Sanction letters and terms of existing bank facilities, with current outstanding and security details
• Order book, key customer contracts or revenue-visibility evidence, as applicable to your business
• Group structure, promoter shareholding and any inter-company exposures
• Projections and business plan, if any exist today — we rebuild them to rating grade
• Past rating letters and rationale documents, if the company has been rated before

CapEasy is a private consultancy and is not affiliated with any government authority. We help you assess eligibility and prepare and file your application; eligibility and approval depend on your specifics and the relevant department’s discretion.