Reserve Bank of India updates capital adequacy risk weights for non-resident corporate exposures and adds CareEdge Global IFSC ratings for IFSC-originated claims

The Reserve Bank of India issued amendments to its commercial bank capital adequacy framework, revising how claims on non-resident corporates are risk weighted and expanding the set of credit rating agencies that may be used for specified exposures. The changes include a specific risk weight mapping for non-resident corporate claims originating at an International Financial Services Centre (IFSC) where ratings are assigned by CareEdge Global IFSC Limited. For ratings assigned by S&P, Fitch and Moody’s, the revised mapping sets risk weights at 20% (AAA to AA/Aaa to Aa), 50% (A), 100% (BBB to BB/Baa to Ba), 150% (below BB/below Ba) and 100% (unrated). For IFSC-originated non-resident corporate exposures rated by CareEdge Global IFSC Limited, the mapping is 20% (AAA), 30% (AA), 50% (A), 100% (BBB) and 150% (BB and below). Unrated claims with aggregate exposure from the banking system above INR 200 crore attract a 150% risk weight, as do claims above INR 100 crore that were previously rated but subsequently become unrated, and no unrated corporate claim may receive a risk weight more favourable than that of its sovereign of incorporation. The permitted rating agencies list for capital adequacy purposes now explicitly includes CareEdge Global IFSC Limited for non-resident corporate exposures originating at IFSC, alongside Fitch, Moody’s and Standard & Poor’s. The amendments take effect immediately.