The rating of bank facilities of NBFCs follow a largely similar methodology to the rating of their long term senior debt. With respect to deposits, Infomerics rates the FD programme of both banks and non-banks. It is rated on both the short term and the long term scale depending on the tenure of the FDs. If it’s a longer term FD with contracted maturity of more than a year, then it is rated on a point based rating scale including modifiers. This is a dedicated rating scale for FDs as per the guidelines of RBI.
While the rating methodology for a FD rating will reflect the fundamental credit quality of the bank/NBFC and will be largely similar to that for a long term rating, it will closely look into aspects such as its FD repayment profile, FD renewal rate, diversity in funding sources and its liquidity position. The FD rating is mapped to the long term rating and can be higher by 1-2 notches than the latter depending on the liquidity assessment of the entity.