Credit Rating Agencies in India

1. ALIGARH MUSLIM UNIVERSITY
DEPARTMENT OF COMMERCE
Project Topic : Credit Rating Agencies In India
Presented By : Mehraj Ahmad Meer
Presented To : Prof. Nasir Zameer Qureshi Sir
Class : M.Com II Sem.
Roll No. : 21CMMCA138
Enrolment No. : GK9853

2. Contents :
 Credit Rating
 Credit Rating Agencies
 Definition
 Functions
 Drawbacks
 Credit Rating Agencies In India
 Conclusion

3. What Is Credit Rating?
Acredit rating is a measurement of a person or business
entity's ability to repay a financial obligation based on
income and past repayment histories. Usually expressed as a
credit score, banks and lenders use a credit rating as one of
the factors to determine whether to lend money.
Credit Rating is also known as Security rating in India and is
expressed inAlphabetical symbols.

4. Credit Rating Agencies
Credit RatingAgencies are the companies that assigns credit
ratings, which rate a debtors ability to pay back debt by
making timely interest payments and the likelihood of
default.
The instruments rated by CRA’s include Govt. Bonds,
Corporate Bonds, NPO’s, Certificate of deposit, IPO’s, Fixed
Deposits, Preferred Stock, Collateralized Securities such as
Mortgage-backed securities etc.

5. Definitions Of Credit Rating
According to CRISIL, credit rating is
“an unbiased and independent opinion as to issuers
capacity to meet its financial obligations. It does not
constitute a recommendation to buy, sell or hold a
particular security.”
According to Moody’s
“Ratings are designed exclusively for the purpose of
grading bonds according to their Investment
qualities.”

6. Functions of Credit Rating Agencies
Provides Unbiased Opinion.
Provides Quality and Dependable Information.
Provides information in Easy to Understand Language.
Provides Information Free of Cost or at Nominal Cost.
Promotes Self Discipline among corporate Borrowers.
Helps Investors in taking Investment Decision.

7. Drawbacks Of Credit Rating
Rating is not a guarantee of soundness.
Problems for New company.
Non disclosure of Important Information.
Lack of reliability of Credit rating.
Compensation paid to analyst is not revealed.

8. International Credit Rating Agencies

9. Credit Rating Agencies In India

10. CRISIL – Credit Rating Information Services of
India Ltd.
CRISILis the First Credit rating agency of India set up on 29th Jan
1987 and started its operations on 1st Jan 1988.
It was promoted and Incorporated by ICICI Ltd. along with UTI and
some other financial institutions as Public Ltd company.
CRISILis India’s leading and largest rating agency ( Share greater than
80%)
Offers Credit Rating services,Advisory services, Research and
Information Services.
S&P’s is the major shareholder with a stake of 67.40%.
Mr. N Vaghul was the first Chairman of CRISIL.

11. ICRA – Information and Credit Rating Agency
 Originally named as Investment Information and Credit RatingAgency
of India Ltd. (IICRA)
 Promoted by IFCI and set up on 16th January 1991.
 ICRAwas a joint venture between Moody’s and Several Indian financial
and banking service organizations.
 The Company changed its name to ICRALtd, and went public on 13th
April 2007.
 Currently Moody’s Corp. owns the majority stake of ICRA(51.86%).
 Services rendered : Rating Services, Information Services,Advisory
Services.

12. CARE – Credit Analysis and Research Ltd.
Set up and promoted by IDBI, UTI and Canara Bank in
collaboration with some banks and financial service companies in
Nov 1993 in Mumbai.
Second Largest Credit rating agency in India.
Various services Offered by CARE are: Rating Services, Credit
reports,Valuations, CreditAppraisal, Reviewing debt Market.
One of the 5 partners of an international rating agency calledARC
ratings.
Head office in Mumbai and regional offices in many states of the
country.

13. ONICRA – Onida Individual Credit Rating
Agency Of India
First Individual Credit Rating agency of India.
It was set up on 27th Oct 1993.
One of the 7 agencies licenced by NSIC to rate MSME’s
Provides rating for :
Risk assessment and analytical solutions to :
Individuals, MSME’s and Corporates
Headquarters Delhi

14. SMERA – Small And Medium Enterprises
Rating Agency
Launched on 25th Sept 2005 by Hon. FM P. Chidambaram.
Founded on the recommendations of SIDBI.
Introduced SME Ratings in India.
Exclusively set up for Micro Small and Medium Enterprises.
Provides ratings which enable MSME’s to raise loans at
competitive rates of Interest.
Headquarter Mumbai

15. Fitch Ratings India Ltd.
First Private Sector RatingAgency in India.
Joint Venture between Duff’s & Phelps andAlliance Group.
The company is 100% owned subsidiary of Fitch Group.
It rates the securities of all kinds of companies including Banking
and Insurance.
In addition it also rates countries on request.
Headquarter Mumbai

16. Rating Scale RatingSymbol
Highest safety: Lowest risk of turning into a
defaulter
AAA
High safety: Very low credit risk AA
Low Risk A
Moderate safety: moderate credit risk BBB
Moderate risk: moderate risk of default BB
High risk: high risk of default B
Very high risk: Very high risk of default C
Default: Instruments are already in default or on
the verge of default
D
Credit Rating Scale

17. Conclusion
Credit Rating is the need of the time, Since Investors
should be equipped with easy methods to make their
investment decisions. If ratings are assigned in a proper,
systematic, transparent way then it will be a boon for
investors and will go a long way in making the
Investment world a safe place.