S&P Rating Upgrades for Shriram Finance, Muthoot, Sammaan Capital
Why in the news
S&P raised the ratings of three large non-bank lenders, Muthoot Finance, Shriram Finance and Sammaan Capital, crediting RBI’s tighter rules for making the sector stronger and more stable.
About the framework
- Scale Based Regulation was set up by RBI in October 2022.
- Rules become stricter as an NBFC’s size and risk profile rise; the upper layer covers the largest NBFCs under closer supervision.
Key facts
| Measure | Requirement |
|---|---|
| Capital | Minimum 9% CET1 to risk-weighted assets |
| Provisioning | Standard asset provisioning on par with banks |
| Exposure | Detailed large exposure framework for close monitoring |
Significance
- Sounder finances, better risk management and higher investor confidence in large NBFCs.
- S&P said the measures made the sector more resilient; upgrades reflect stability and improved governance.
- The three firms are placed to sustain growth and market trust.
Exam angle
- Regulator: RBI; framework: Scale Based Regulation (2022).
- CET1 floor: 9%.
- Rating agency: S&P.