Calcutta, Oct. 7: Credit agencies will gain from revised capital adequacy norms for banks under the Basel II accord that will be implemented from March next year.

According to Reserve Bank guidelines, banks with overseas operations have to implement the norms from March; those operating only within the country must switch from March 2009.

Under the revised system, banks will have to provide for risk capital according to the credit rating of the borrower for every loan of Rs 10 crore or more.

This means, banks will seek the creditworthiness of borrowers, for loans of more than Rs 10 crore.

“There are only around a thousand Indian companies that have got any credit rating by any one of the four rating agencies,” said Mukesh Agarwal, director (business development — ratings), Crisil Ltd.

The number of non-rated companies is much higher, Agarwal said.

According to statistics provided by the ministry of company affairs, the number of registered operating companies as of October 2005 is 7,12,800.

The number of small units is more than a crore.

While Agarwal could not attach a figure to the business potential of the four rating companies — Crisil, Icra, CARE and Fitch — it is estimated at more than Rs 10,000 crore given the huge number of unrated companies.

Rating agencies normally charge from a company between 0.2 per cent and 0.1 per cent of a loan as fees for initial rating.

“The initial fees vary between Rs 2 lakh and Rs 60 lakh depending on the (loan) facility,” said Agarwal.

Even after the initial grade, Crisil continues to monitor the company and the ratings change when there is a development.

For this, Crisil charges an annual surveillance fee of around 0.03 per cent.

The rating companies also grade small and medium enterprises.

Under the Basel II system, small and medium enterprises seeking a loan of less than Rs 10 crore won’t be affected in the absence of a rating, Agarwal said.

Banks will have to provide for 100 per cent risk weight for loans between Rs 5 crore and Rs 10 crore; and 75 per cent weight for loans below Rs 5 crore.

The Basel II system prescribes a capital adequacy of 9 per cent.

A 100 per cent risk weight means that banks will have to set aside Rs 9 for every Rs 100 of a loan.

For loans with 75 per cent risk weight, banks will have to keep Rs 6.75.

However, banks are offering a discount of up to 1 percentage point in interest rates to small and medium enterprises with a credit rating.

Rating agencies charge a much lower fee — between Rs 75,000 and Rs 1 lakh — to small and medium enterprises.

This fee is also subsidised to the extent of 75 per cent by the government.

Given the opportunities in the business following Basel II, rating agencies are hiring people big time.

“We were present only in the metros so far. Now we are expanding to smaller towns and cities,” Agarwal said.