1 Mar 2010

Credit ratings mandatory for finance houses - Reserve Bank

12:28 pm on 1 March 2010

The Reserve Bank says credit ratings are now mandatory for finance firms, building societies and credit unions, as it takes step to restore investor confidence and strengthen the financial system.

The move is the latest in tightening rules surrounding the non-bank sector in the wake of collapses in finance firms over the past few years. It also includes capital adequacy requirements, and restrictions on lending to related parties.

Governor Alan Bollard says credit ratings from approved rating agencies will help people assess the risk when investing their funds.

Smaller non-bank organisations with less than $20 million of consolidated liabilities can obtain an exemption from a rating, but they need to tell the Reserve Bank in advance.