The Reserve Bank of India (RBI) has reportedly asked credit rating agencies (CRAs) not to identify it as the regulator of bank deposits in their rating communications. The development was first reported by The Economic Times on 17 August, citing two people familiar with the matter, and has since drawn wider attention across the financial sector.

According to the report, the RBI conveyed this instruction to the rating industry roughly ten days before the story broke. The central bank has not publicly stated its reasoning, and rating agencies are understood to have approached the Securities and Exchange Board of India (SEBI) for guidance on how to proceed.

The issue stems from a SEBI circular dated 10 February 2026, which applies to CRAs rating financial instruments that fall under the purview of a regulator other than SEBI. The circular requires rating agencies to name the relevant regulator in their rating reports, press releases, and rationales for such instruments, and to maintain separate disclosures clarifying that SEBI's investor-protection and grievance-redressal mechanisms do not extend to those instruments. Rating agencies have already begun complying with this requirement — Acuité's disclosures, for instance, list the RBI as the regulator for fixed deposits raised by NBFCs, banks, housing finance companies, and other financial institutions.

This is where the new RBI instruction creates a conflict: SEBI's framework requires CRAs to name the regulator of the rated instrument, while the RBI does not want to be named as the regulator in the context of bank deposit ratings specifically. Rating agencies now have to reconcile these two positions, and how SEBI responds to their query is likely to determine the path forward for bank deposit ratings. It is worth noting that this does not amount to an immediate directive to stop rating bank deposits. Rather, if the disclosure conflict cannot be resolved, CRAs could eventually find it difficult to continue issuing such ratings in their current form.

A bank deposit rating reflects an independent assessment of the credit risk attached to a bank's deposit obligations, typically based on factors such as capital adequacy, asset quality, management strength, earnings, liquidity, and sensitivity to interest-rate and foreign-exchange movements. For most individual depositors, this rating is unlikely to be a primary factor in choosing where to bank. It tends to matter more for institutional depositors, public-sector entities, and companies whose internal treasury policies require surplus funds to be placed only with banks meeting a specified rating threshold.

It is also important to separate this issue from deposit safety itself. A credit rating is distinct from deposit insurance. Eligible deposits in Indian banks continue to be insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) up to ₹5 lakh per depositor per bank, covering principal and interest as per applicable rules — and this protection is unaffected by the current uncertainty around deposit ratings. The practical question, therefore, is not whether depositor protection has changed, but whether depositors and institutions could lose access to one independent data point currently used to compare credit risk across banks.

Key Highlights

• RBI has reportedly asked CRAs not to name it as the regulator of bank deposits in rating disclosures, per an ET report citing sources familiar with the matter

• The conflict arises from a SEBI circular (10 February 2026) that requires CRAs to disclose the relevant regulator for instruments outside SEBI's purview

• Rating agencies have sought SEBI's guidance on reconciling the two requirements

• This is not a directive to stop rating bank deposits immediately, but continued ratings could become difficult if the disclosure conflict isn't resolved

• Deposit insurance via DICGC (up to ₹5 lakh per depositor per bank) is unaffected and remains separate from credit ratings

Conclusion

The situation currently sits in regulatory uncertainty rather than resolution. The next steps depend on the guidance SEBI provides to rating agencies and any further clarification the RBI may issue. Until then, bank deposit ratings remain an active but unsettled area, and depositors should not read this development as a signal of reduced safety for their deposits.

Disclaimer

This article is intended solely for informational and educational purposes and should not be interpreted as financial, investment, legal, tax, regulatory, or professional advice of any kind.

The content is based on publicly available media reports, including reporting by The Economic Times, available at the time of publication. FinMen Advisors is not affiliated with, endorsed by, or officially associated with the Reserve Bank of India, SEBI, any credit rating agency, or any other organization mentioned in this article unless expressly stated otherwise.

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