Change in Rating Based on Risk Category of Country* Country Ratings Cash Classified under different Categories Mitigations, Advance from First Class Bank/ECGC Cover Net Country Change in CRA Rating a b c D=b-c e 1 Insignificant Risk NIL 2 Very Low Risk NIL 3 Low Risk NIL 4 Low Medium Risk NIL 5 Medium Risk NIL 6 Medium Risk but under caution Down by 1 Stage 7 High Risk and under caution Down by 2 stage 8 Very high risk and caution Down by 3 9 Off Credit/ Restricted and under caution Down by 4 stage from Medium Risk to off Credit/ Restricted & under caution (5 to 10) XXX YYY ZZZ * Latest Country Ratings are circulated by IBG of SBI are given in annexure and will be updated from time to time. Final CRA Rating after country Risk would be determined as indicated in following example: Risk Categories CRA Rating before downgrade Corresponding Downgrade CRA Rating after Downgrade CRA Rating after country Risk (Lower of SBIBL8/SBIBL9) Medium Risk SBIBL-8 NIL SBIBL-8 SBIBL-9 Medium Risk but under caution SBIBL-8 Down by stage 1 SBIBL-9 #If the Borrower rating undergoes a downgrade of 2 more stages on account of country risk, the sanction be required to be obtained from the Board of Directors.
APPENDIX A TRADING SECTOR : SIMPLIFIED MODEL BORROWER RATING SUMMARY (A) Financial Risk (FR) (a) Weight (b) Maximum Weighted Score (a) x(b) ( c ) Company’s Weighted Score (d) Parameters (i) TOL/ TNW 10 2 20 (ii) Current Ratio 10 2 20 (iii) Return on Capital Employed (ROCE) (%) 10 1 10 (iv) 10 1 10 (v) PAT/Operating income 10 1 10 (vi) (a) Gross Average DSCR (for TL) or (b) Inventory/Net Sales + Receivables/Gross Sales (Days) – (WC) or (c) [ Sum of Scores under (A+B)]/2 (for a company enjoying both WC & TL facilities) 10 2 20 (vii) Group Risk 10 0.5 5 (vii) Collateral Security 10 2 20 (viii) Forex Risk 10 0.5 5 Total Score (Annexure A1) 120 Total Score normalised to 60 (Existing Unit) 120/2=60 Total Score normalised to 30 (New Unit) 120/4=30 Qualitative Factors (-ve)- (Annexure A2) (-10) 1 (-10) Score (FR) 60
RISK MEASURED IN TERMS OF TANGIBLE SECURITY PROVIDED Maximum Weighted Score : 20 Security Band (a) Marks (b) Weight (c) Company Band (d) Company’s Score from(b) (e) Company’s Weighted Score = (e) x (c ) (f) = or 2 the exposure 10 2 =1.5 or between 1.51 to 1.99 8 =1 or between 1.11 to 1.49 6 =0.75 or between 0.76 to 0.99 5.5 =0.50 or between 0.51 to 0.74 5 =0.25 or between 0.26 to 0.49 4 =0.15 or between 0.16 to 0.24 2 Less than 0.15 0 Forex Risk Forex Risk (Maximum Weighted Score: 5) Value Statements Company’s Score from (a) Company’s Weighted Score (c) (d) = (c ) x (b) 1 Natural/ Full Hedging of forex risk; loss/anticipated loss is NIL/Minimum 2 Mitigation to the extent of 75% of the unhedged forex risk 7 3 Mitigation to the extent of 50% of the unhedged forex risk 5 4 Mitigation to the extent of 25% of the unhedged risk 2 5 No Risk Mitigation of the unhedged forex risk 0 ANNEXURE-A2 TRADING SECTOR ((SIMPLIFIED QUALITATIVE FACTORS : (-ve) 1 ( . . 0
=0.75 or between 0.76 to 0.99 5.5 =0.50 or between 0.51 to 0.74 5 =0.25 or between 0.26 to 0.49 4 =0.15 or between 0.16 to 0.24 2 Less than 0.15 Risk (Maximum Weighted Score: 10) Value Statements Company’s Score from (a) Company’s Weighted Score (c) (d) = (c ) x (b) 1 Natural/ Full Hedging of forex risk; loss/anticipated loss is NIL/Minimum 2 Mitigation to the extent of 75% of the unhedged forex risk 7 3 Mitigation to the extent of 50% of the unhedged risk 5 4 Mitigation to the extent of 25% of the unhedged forex risk 2 5 No Risk Mitigation of the unhedged forex risk 0 ANNEXURE B2 NON-TRADING SECTOR : SIMPLIFIED MODEL - FINANCIAL RISK QUALITATIVE FACTORS: (-ve) Details Amount as per Balance Sheet Probability of Invocation/ Claim/ impact (%) Amount assessed to be at Default =(a) x (b) Impact on TNW of unit : column (A) of Table-II (%) Negative Marks: Column (B) of Table-II 1 0
(i) The integrity and character of the Management is beyond reproach. No fraudulent deals/transactions. No unsatisfactory feature of the unit has come to light. 4 (ii) The management has good reputation in the market. The management is reportedly reliable. There are no adverse reports on the integrity of the management or promoters. Features revealed by reports on conduct of account/stock audit/spot audit/ periodic inspection reports do not comment against the integrity of the unit. Remarks of inspectors do not indicate doubtful integrity. 3 (iii) Rumours of adverse features but not fully substantiated and hence may/may not be reckoned depending upon the seriousness of such features. 2 (iv) Reports on conduct of account / periodic inspection & audit reports comment against the integrity of the unit. The unit is a defaulter under MCIB [Botswana Credit Information Bureau]. History indicates involvement in civil/criminal suits/ questionable deals. 0 (ii) Track Record & Conduct of Account S. No. Value Statement Score (i) Maintains financial discipline, no irregularity in the account. The management is sincere and open to suggestions to bring improvement in the financial management. 4 (ii) On a few occasions, repayment of is delayed. The management tries to set things right in case of lapses. Some Group companies or associates not doing well but the management is co-operating in reviving/settling the over dues. 3 (iii) The conduct of account is satisfactory. Repayments were delayed but the account continues to be standard asset. 2 (iv) Accounts irregular but remain standard. 1 (v) Accounts rendered frequently irregular. 0 (iii) Expertise/Managerial Competence & Commitment S. No. Value Statement Score (i) Qualified management team. Although the team may not be very qualified, it has an excellent understanding of the industry. High of competence and commitment. 3 (ii) The unit is not professionally managed but the owners have the requisite competence/expertise/commitment. 2 (iii) The management is having relatively good expertise in the line of business. 1 (iv) Ad hoc decisions indicating low expertise in responding to business demands. Structured planning process not evident. 0.5 (v) No expertise in the line of activity. No commitment /planning to overcome the recurring problems on account of lack of expertise. 0 (iv) Payment Record S. No. Value Statement Score (i) The record of meeting commitments to lenders and creditors is excellent. The unit has rarely defaulted on this 2