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Risk Weight in respect of investments in Corporate Bonds by Standalone Primary Dealers (SPDs)

RBI/2015-16/388
DNBR.CO.PD.No.080/03.10.01/2015-16

April 28, 2016

All Standalone Primary Dealers

Madam/ Sir,

Risk Weight in respect of investments in Corporate Bonds
by Standalone Primary Dealers (SPDs)

In terms of the Capital Adequacy Standards and Risk Management Guidelines for SPDs, risk weight of 100% has been stipulated in respect of investments in corporate bonds, for the purpose of calculating capital adequacy.

2. On a review, in order to bring parity with risk weights assigned to investment in corporate bonds by SPDs and banks, it has been decided to link the risk weights, assigned by SPDs to their investments in corporate bonds, to the rating of the bonds as under:

A. Short term instruments (bonds = 1 year maturity)
CARECRISILIndia RatingICRABrickworkSMERARisk weight (%)
CARE A1+CRISIL A1+IND A1+ICRA A1+Brickwork A1+SMERA A1+20
CARE A1CRISIL A1IND A1ICRA A1Brickwork A1SMERA A130
CARE A2CRISIL A2IND A2ICRA A2Brickwork A2SMERA A250
CARE A3CRISIL A3IND A3ICRA A3Brickwork A3SMERA A3100
CARE A4&DCRISIL A4&DIND A4&DICRA A4&DBrickwork A4&DSMERA A4&D150
UnratedUnratedUnratedUnratedUnratedUnrated100

B. Long term instruments (bonds > 1 year maturity)
RatingAAAAAABBB= BBUnrated
Risk Weight203050100150100

3. The above shall be applicable with immediate effect.

Yours faithfully

(C.D.Srinivasan)
Chief General Manager

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