This document provides an overview of credit ratings and credit rating agencies in India. It discusses what credit ratings are, how they are assessed by credit rating agencies, and some of the major credit rating agencies operating in India like CRISIL, CARE, and ICRA. It also outlines the services provided by credit rating agencies, the need for and importance of credit ratings in India, who can use credit rating services, and the credit rating process.

1. Presented By:-
• Amit Sethi
• Ankit Agrawal
• Partho Sen
• Pratikshya Mohanty
Guided By:-
Dr. Maheswar Sahu Sir

2. Credit Rating
• A credit rating assesses the credit worthiness
of an individual, corporation or even a country
• A credit rating tells a lender or investor the
probability of the subject being able to pay
back a loan
• Credit ratings are calculated from financial
history and current assets and liabilities

3. Credit Rating Agency
• A credit rating agency (CRA) is a company that
rates debtors on the basis of their ability to pay
back their interests and loan amount on time and
the probability of them defaulting.
• Assessed entities may be companies, special
purpose entities, state governments, local
governmental bodies, non-profit organisations
and even countries.
• These rating agencies are paid by the entity that
is seeking a credit rating.

4. Services by Credit Rating
• Structure Finance Ratings
• Sub-sovereign ratings
• Issuer Rating
• Insurance ratings
• IPO Grading
• Bank & FI ratings
• Fund credit quality rating
• Corporate Governance ratings
• Corporate ratings

5. Need For Credit Rating
• Growing number of cases of DEFAULTS in
Payment of Interest and Repayment of
Principal sum borrowed by way of Fixed
Deposits, Issue of Debentures or Preference
Shares or Commercial Papers
• To maintain the investor’s confidence, since
defaults break the confidence of investors in
corporate instruments

6. Importance of CREDIT Rating in India
• Establish a link between Risk and Return
• Superior – Low cost information to Investors
• To guide investors in making investment decisions
• Helps merchant bankers, brokers, regulatory
authorities, etc., in discharging their functions
related to debt issues
• Required by the regulators
• Build up market reputation
• Lower cost of funding

7. Who Can Use Credit rating Services?
• Commercial Banks
• Asset Management Company
• Corporates
• Financial Institutions
• Insurance Companies
• Public/Development Fin. Institutions

8. Credit rating in India
• The concept came in India in 1987 with the
setting up of CRISIL
• As the scope of credit rating widened ICRA &
CARE was set up in 1991 & 1993 respectively
• The first private sector credit rating company
was Duffs & Phelps Credit Rating India Pvt. Ltd
formed in 1995

9. CRISIL
• The first credit agency setup on January 1, 1988,
jointly started by ICICI bank and UTI with an equity
capital of Rs. 4 crores, as public Ltd company
• CRISIL is India’s leading rating agency, and is the
fourth largest in the world
• With over a 60% share of the India Rating Market,
CRISIL Ratings is the agency of choice for issuers and
investors.
• CRISIL’s majority shareholder, Standard and Poor’s is
the world’s foremost provider of independent credit
ratings, indices, risk evaluation, investment research
and data

10. CARE
• CARE ratings commenced its operations in April 1993
• CARE ratings provides the entire spectrum of credit
rating that helps the corporate to raise capital for their
various requirements and assists the investors to form
an informed investments decision based on credit risk
and their own risk expectations.
• For the regulators, CARE ratings‘ services facilitate in
determining the eligibility criteria and entry barriers for
different types of securities, to monitor financial
soundness of borrowers and to promote overall
efficiency in the debt market.

11. ICRA
• ICRA Ltd (formerly Investment Information
and Credit Rating Agency of India Limited) was
setup in 19th January 1991 by IFCI
• It is a public Ltd company whose majority
stakes are with IFCI (26%) and the balance is
with UTI, LIC, PNB, Central Bank of India, Bank
of Baroda, UCO Bank and SBI
• Alliance with Moody’s Investor Service

12. ONICRA
• ONICRA is one of the leading credit and performance
rating agency in India. It provides ratings, risk
assessment and analytical solutions to Individuals,
MSMEs and Corporate.
• ONICRA plays a central and critical role in collecting
and analyzing a variety of financial, operational,
industry and market information, synthesizing that
information, and providing autonomous, reliable
assessments of the entity, thereby providing
stakeholders with an important input into their
decision making process.

13. Credit Rating Symbols
• AAA & AA – Highest safety
• A – Adequate safety
• BBB – Moderate safety
• BB – Inadequate safety
• B – High risk
• C – Substantial risk
• D - Default

14. Rating Process
• Rating Agreement and Assignment to
Analytical Team
• Management Meeting
• Rating Committee
• Communication with the Issuer
• Dissemination to Public
• Surveillance and Annual Review

15. Drawbacks
• Uniformity of methodology
• Standardization in ratings
• Distinction
• Tool for guidance
• Reward preference
• Credibility of information
• Impact of changing environment

16. Thank You