mumbai to improve ratings disclosures on bank credit to large customers rbi on monday said unless rating agencies disclose names of all lenders in their rating statements banks cannot use such ratings for capital computation for making provisionsreviewing the prudential norms for risk weights for exposures to large corporates and nonbanking finance companies a notification from rbi reserve bank of india said the new mandatory loan rating disclosures will be effective from march 31 2023issuing the notification and setting the new deadline the regulator said despite repeated reminders external credit assessment institutions have not been making the mandated disclosures citing lack of consent from borrowersas part of the master circular on basel iii capital regulations issued on april 1 2022 the monetary authority had asked rating agencies to disclose the name of all the banks in the credit rating statements after getting the consent from borrowers from august 31 2021 but they have not been doing so citing their inability to secure the consent from borrowerssuch disclosures make banks eligible to compute their capital requirement for such loans and make the needed capital provisionssuch disclosures will make bank eligible to derive risk weights for their unrated exposures based on the ratings available for a specific rated debt provided the banks facility ranks pari passu or senior to the specific rated debt in all respects and the maturity of the unassessed claim is not later than the maturity of the rated claimit is observed that the press releases issued by rating agencies on rating actions are often devoid of the lenders details absence of such information may result in banks applying the derived risk weights for unrated exposures without satisfying themselves regarding adherence to prescribed conditions this may consequentially lead to potentially lower provision of capital as well as underpricing of risks the central bank said in the latest notification which is aimed at addressing such information asymmetryon june 4 2021 the reserve bank had asked rating agencies to disclose the names of the banks and the corresponding credit facilities rated by them in the press statements on rating actions by august 31 2021 after obtaining requisite consent from borrowershowever on a review it has been observed that the above disclosures are not available in a large number of rating statements owing to the absence of requisite consent from borrowers to the rating agenciesit is therefore advised that a bank loan rating without the above disclosure by the rating agency shall not be eligible for being reckoned for capital computation by banks banks shall treat such exposures as unrated and assign applicable risk weights as prescribed in the master circular on basel iii capital regulationsthe disclosures are needed for better prudential practices as a borrower can get loans from multiple banks but has rating from one bank wherein the bank whose name is disclosed can reckon the said rating for risk weighting purpose at the cost of other credit lines from other bankssince rating agencies are not making the above disclosure