Are credit ratings stifling NBFCs?

The lack of clarity in the rules has seen rating agencies become gatekeepers, determining who gets or doesn’t get credit.

Your debt is—at the heart of it—someone else’s risk. And as a lender, the assessment of that risk is the key to survival. A lot goes into it, but a big part of weighing the likelihood of a borrower paying depends on what are known as credit rating agencies, purveyors of arcane labels such as “AA-” and “Baa3”. In more prosaic terms, rating agencies assess large-scale borrowers, from nations to corporations, on the basis of their ability to pay back loans in a timely fashion.

For years now, the effectiveness of credit ratings have been questioned across the world, with …


Arti Singh

Arti is a former writer at The Morning Context. She previously worked with publications such as ET Prime, VCCircle, Firstpost and EETimes. Arti has keenly tracked the evolution of financial technology in India and written some of the defining pieces on the ecosystem as it birthed and matured. Even when not writing about it, she loves to dissect the revenue models, margins and regulations that are shaping the sector.