why does company do credit rating?

    CFO BD

In recent days, banks almost compel companies to credit rating and this is a condition of getting loan. The credit rating incurs additional cost to company. How could company be benefited by credit rating? Please give opinion.

   Answers



   EK

Through a good credit rating companies can ask to banks to reduce the interest/profit rate. Since banks are benefited by reducing their risk weighted assets and maintain regulatory capital adequacy ratio through good credit rating by clients, banks should favour client by reducing the rate. Companies should increase their negotiation power by a good credit rating.

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