Dec. 30, 2019

Reserve Bank of India (RBI) has criticised Credit Rating Agencies (CRAs) for allowing low-rated companies to do "rating shopping".


  • According to RBI, Rating shopping refers to how, a company or a debt paper manages to get same or better rating from another agency within three months of it getting a poor rating.

  • In the 25th edition of the Financial Stability Report, RBI has warned of 'rating shopping' by companies for long-term bank loans based on indicative ratings given by CRAs which are not available to the banks or investors.

  • Rating agencies have been largely blamed for their lax policies and oversight for the 2008 global financial crisis.

  • A fortnight before IL&FS went belly up in September 2018, rating agencies India Ratings, Icra and Care had given its debt papers AAA/AA+ ratings.