The Reserve Bank of India (RBI) has decided to align the provisions for Housing Finance Companies (HFCs) relating to the rating of deposits taken by them with provisions on the subject prescribed for non-banking finance companies (NBFCs).

Accordingly, the central bank has approved seven Credit Rating Agencies (CRAs) – Crisil, ICRA, CARE Ratings, Fitch Ratings India Pvt Ltd, Brickwork Ratings, Acuite Ratings & Research and Infomerics Valuation and Rating – and their respective minimum investment-grade credit rating.

For example, a HFC’s fixed deposit programme needs to have a minimum investment-grade credit rating of ‘FA-’ from Crisil or ‘MA–’ from ICRA or ‘BBB’ from CARE Ratings.

Crisil’s ‘FA-’ rating indicates that the degree of safety regarding timely payment of interest and principal is satisfactory. Changes in circumstances can affect such issues more than those in the higher-rated categories.

ICRA’s ‘MA-’ rating indicates that the rated deposits programme carries average credit risk.

CARE Ratings ‘BBB’ rating indicates that instruments with this rating are considered to have a moderate degree of safety regarding timely servicing of financial obligations. Such instruments carry moderate credit risk.