A credit rating assigned to a borrower's bank facilities — cash credit, working capital demand loans, term loans, letters of credit, bank guarantees — rather than to a market instrument.
Often abbreviated BLR. It is the most common kind of rating in India by volume, and the reason most rated Indian borrowers are rated at all.
Why it exists
Under the Basel standardised approach a bank assigns a risk weight to a corporate exposure by reference to a rating from an External Credit Assessment Institution accredited by the RBI. That accreditation is a separate list from SEBI registration, and it has changed over time — the RBI’s eligible-ECAI notifications are the authority on which agencies are currently eligible, and a SEBI registration does not by itself put an agency on that list.
So the bank loan rating is commissioned to serve the lender’s capital calculation, not an investor’s purchase decision. That single fact explains most of what is distinctive about it.
How it differs from an instrument rating
| Bank loan rating | Instrument rating | |
|---|---|---|
| Rated object | Bank facilities | NCDs, commercial paper, bonds |
| Audience | The lending bank and its regulator | Investors |
| Counterparty named | Frequently, in the lender-wise annexure | No counterparty to name |
| Typical borrower | Mid-corporates and SMEs, often with no market debt at all | Issuers accessing the debt market |
What a bank loan rating release carries
The facilities table lists every rated facility with type, amount and rating. Long-term facilities are rated on the AAA to D scale with an outlook; short-term facilities on the separate A1 to A4 scale, with no outlook. A single borrower routinely holds both.
Two cautions on the amounts. They are sanctioned limits, not drawings — the closest the document comes to a drawn figure is the average limit utilisation sometimes quoted in the liquidity paragraph. And proposed or unallocated limits are routinely included, so a total taken off the table without excluding them overstates the position.
The lender dimension
Because the rating must attach to a specific facility of a specific lender for capital purposes, bank loan rating releases frequently append a lender-wise annexure naming the bank behind each line. Whether it appears depends on borrower consent: across our corpus, 46.2% of rating actions carry at least one lender row, as at 29 August 2026.
Related
- Lender-wise annexure — the table naming the bank behind each rated facility
- Non-convertible debenture — the instrument-side counterpart
- Rating rationale — the document a bank loan rating is published in
- Credit rating agencies in India — bank loan versus instrument ratings, at length
- Glossary index