RBI Allows Use of CareEdge Global IFSC Ratings for Capital Adequacy under Basel III [Read Notification]

The Reserve Bank of India (RBI) issued a Notification No. RBI/2025-26/65, dated July 10, 2025, regarding Basel III Capital Regulations and the recognition of CareEdge Global IFSC Limited as an ECAI.

The RBI permits banks to use CareEdge Global IFSC Limited as an officially recognized External Credit Assessment Institution (ECAI) under Basel III Capital Regulations.

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This notification applies to:

• All Scheduled Commercial Banks, including Small Finance Banks.
• It excludes Local Area Banks, Payments Banks, and Regional Rural Banks.

Background:

Under the Basel III framework, banks are required to hold a certain amount of capital against their credit exposures. To determine the risk level of loans or claims, banks rely on ratings provided by external credit rating agencies. Until now, the RBI had recognized three international agencies for such ratings:

• Fitch
• Moody’s
• Standard & Poor’s

RBI has now decided to allow banks to also use credit ratings issued by CareEdge Global IFSC Limited. This specifically applies to ratings assigned to non-resident corporates that originate from International Financial ServicesCentres (IFSCs) in India.

Risk Weight Mapping:

The notification also provides a rating-risk weight mapping for calculating capital requirements:

This table means that the higher the credit rating assigned by CareEdge Global IFSC, the lower the risk weight banks need to apply when calculating how much capital they must hold for loans to such entities.

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