Rate Your NBFC

A credit rating is an independent assessment of a company’s ability to meet its financial obligations. For NBFCs (Non-Banking Financial Companies), it acts as a financial credibility score—reflecting their repayment capacity, governance standards, asset quality, and overall financial health. These ratings are issued by agencies like CRISIL, ICRA, CARE Ratings, and India Ratings, and they influence everything from borrowing costs to investor trust.

Unlike banks, NBFCs often rely heavily on market borrowings. A strong credit rating can unlock lower interest rates, wider funding access, and strategic partnerships. Conversely, a weak rating can limit growth and raise capital costs.

Why Credit Ratings are Crucial for NBFCs?

• Access to Cheaper Capital: Higher ratings lower borrowing costs, directly influencing profitability and expansion capability.

• Investor Confidence: Ratings assure stakeholders about repayment discipline, governance quality, and overall stability.

• Regulatory Alignment: Rating levels are often scrutinized during RBI assessments, especially for permissions, refinancing, or onboarding new products.

• Strategic Advantage: A strong rating enhances credibility in collaborations with banks, fintechs, or global partners.

Strategic Benefits Beyond Borrowing

• Market Differentiation: A strong rating sets an NBFC apart in a crowded market, signaling professionalism and financial discipline.

• Partnership Readiness: Banks, fintechs, and global investors often require a minimum rating before entering into strategic alliances.

• IPO Preparation: For NBFCs eyeing public listing, a good credit rating is a foundational step toward investor trust and regulatory readiness.

Operational Insights from the Rating Process

• Free Diagnostic Value: The rating process itself can uncover blind spots in governance, asset quality, or liquidity management.

• Benchmarking: NBFCs can compare their performance against peers and identify areas for improvement.

• Early Warning System: Ratings often flag potential risks before they escalate—helping NBFCs course-correct proactively.

Regulatory & Compliance Alignment

• Deposit Acceptance: NBFCs accepting public deposits must maintain at least a 'BBB–' rating from SEBI-registered agencies.

• RBI Supervision: Ratings influence how regulators perceive risk and determine supervisory intensity.

NBFCs Who Have Benefited from Such Rating.

Bajaj Finance

• Consistently rated AAA by CRISIL and ICRA.

• This top-tier rating has helped Bajaj Finance raise funds at competitive rates, fueling its rapid expansion in consumer lending and digital finance.

Muthoot Finance

• With a high rating for its gold loan portfolio, Muthoot has attracted institutional investors and maintained strong liquidity—even during economic slowdowns.

LIC Housing Finance

• Its strong credit profile has enabled it to issue long-term bonds at favorable rates, supporting its housing finance operations across India.

 Shriram Transport Finance

• Improved ratings over time have allowed it to diversify funding sources and reduce reliance on high-cost borrowings, especially in the commercial vehicle financing segment.

Mahindra Finance

• Benefited from its parent group’s credibility and its own consistent rating upgrades, helping it expand rural lending operations with lower capital costs.

The Right Advisor can be a Game Changer

In a rating process where both numbers and nuance matter, an advisor with domain experience can tilt the scales. They combine financial intelligence with storytelling, regulatory fluency with pragmatism, and strategic outlook with operational clarity.

A knowledgeable advisor isn’t just a guide—they're a strategic ally who decodes complex rating frameworks and positions the NBFC in its best light.

Diagnostic Expertise

• Identifies operational or compliance gaps that could undermine rating potential.

• Performs mock audits to assess readiness and simulate rating outcomes.

Structuring & Documentation

• Recommends tweaks in capital structuring, asset classification, or provisioning norms.

• Ensures governance policies are well-articulated and documented for rating agencies.

Communication & Presentation

• Crafts narratives around intent, resilience, and forward-looking strategies that resonate with rating committees.

• Aligns internal data to rating parameters—liquidity, capital adequacy, NPA management, etc.—in a language that's rating-agency-friendly.

Liaison & Relationship Building

• Maintains professional rapport with rating analysts, helping clarify context and respond to concerns.

• Navigates feedback loops, ensuring the NBFC can adjust before final scoring.