RATING FIRMS MAY USE AI TO ENHANCE MONITORING
The Reserve Bank of India has asked credit rating agencies to enhance the quality of monitoring by means of social media and corporate filings, instead of depending solely on information provided by rated entities.
The Reserve Bank of India (RBI) has asked credit rating agencies (CRAS) to enhance the quality of monitoring by means of social media and corporate filings, instead of depending solely on information provided by rated entities.
A person aware of the proceedings said the RBI advised the CRAS not to depend only on information after critical events, but also to pick up signals and take guard before defaults happen.
The central bank suggested the use of intelligent information systems — like machine learning and artificial intelligence (AI) — which could capture social media alerts and trends useful for rating purpose. This issue is likely to be taken up by a panel with representation from Sebi, Irdai, and the PFRDA, for the benefit of improving quality of oversight.
On their part, the CRAS sought access to the Central Repository of Information on
Large Credits ( CRILC) — maintained by the central bank — during a meeting with Governor Shaktikanta Das, and the deputy governors.
The banking regulator informed these agencies that it would consider their plea for access to the CRLIC.
During the video conference, the CRAS presented their assessment of the macroeconomic situation, and outlook on various sectors.
They also shared their perspective on the overall financial health of entities rated by them, and major factors that could affect credit ratings in the current context, the RBI said in statement.
The RBI also provided feedback on ways to further strengthen the rating process, and enhance engagement with key stakeholders.
Another official said the CRAS expressed concerns over the rising number of “not cooperating” firms. They said such entities should be taken off from monitoring, after remain in the above category for 6-12 months.