Bank Loan Rating

Bank loan rating from external agencies is used by Banks, Vendors, Financial Institutions, Investors and others to gauge the financial health of an Enterprise and its ability to make timely payment of its bank loan, including principal and interest payment. Further, to improve awareness about credit rating and its benefit, the Government of India also provides a subsidy for MSME businesses to obtain SME credit rating.
• Bank loan rating (BLR) is essentially a credit rating for bank facilities or loans given by banks, namely – Rupee Term Loans, – Foreign Currency term loans incl. FCNR (B) loans – Cash Credit facilities, Overdraft – Packing Credit – Letter of Credit, Bank Guarantees.
Bank Loan rating is used by Banks to calculate the capital required by them for that loan. – They save capital for higher rated companies and need to keep aside additional capital for lower rated loans

Benefits of BLR: Banks

  • Risk-based pricing of bank loans & facilities
  • Helps inculcate financial discipline in borrowers
  • Quicker processing of loans & enhancements
  • Computation of Capital Adequacy Ratio (CAR) as per RBI guidelines
  • Independent view of borrowers’ strengths and weaknesses by a reputed rating agency
  • Focus on Client Relationship Management
  • Dynamic ‘health check’ of portfolio



Benefits of BLR: Corporates

  • Risk-based pricing of bank loans – lower borrowing costs for higher rated entities
  • Quicker processing of loans & enhancements
  • Access to alternate avenues of funding
  • Provide an independent view of the company’s strengths and weaknesses through a detailed credit rating report
  • Enhance visibility for the corporate in the investment community
  • Avoid penal interests on unrated bank loans



REQUIREMENTS FOR BANK LOAN RATING:- (All copies of documents should be self attested by the customer)

  • Risk-based pricing of bank loans – lower borrowing costs for higher rated entities
  • Quicker processing of loans & enhancements
  • Access to alternate avenues of funding
  • Provide an independent view of the company’s strengths and weaknesses through a detailed credit rating report
  • Enhance visibility for the corporate in the investment community
  • Avoid penal interests on unrated bank loans