1. PRESENTION ON
CREDIT RATING
Presented by
MAULIK PATEL(11MBA010)
Subject :MFS
College : Shree Saraswati Education
Sansthan’s Group Of Institutions

2. CREDIT RATING

3. CREDIT RATING
 A credit rating assesses the credit value of an
individual, corporation, or even a country.
 It 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.
 The ratings are expressed in code numbers which
can be easily comprehended by the lay investors.

4. OBJECTIVES OF CREDIT RATING
 The main objective is to
provide superior and low cost information to investors for taking a
decision regarding risk-return trade off, but it also helps to market
participants in the following ways;
 Facilitates formulation of public guidelines on institutional
investment,
 Helps merchant bankers, brokers, regulatory authorities, etc., in
discharging their functions related to debt issues,
 Encourages greater information disclosure, better accounting
 standards, and improved financial information (helps in investors
protection),
 May reduce interest costs for highly rated companies,
 Acts as a marketing tool

5. CREDIT RATING PROCESS

6. CREDIT RATING AGENCIES IN
INDIA
 Credit Rating and Information Service on India Ltd (CRISIL)
 Investment Information and Credit Rating Agency (ICRA)
 Credit Analysis and Research Ltd (CARE)
 FITCH Rating India Private Ltd
 Duff Phelps Credit Rating Pvt. Ltd. (DCR India) and
 Onicra Credit Rating Agency of India Limited
 :Is an established player in the individual credit assessment and scoring
services space in the Indian market.

7. CRISIL
 The first credit agency setup on January 1, 1988, jointly started by ICICI 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 Indian Ratings market, CRISIL Ratings is the
agency of choice for issuers and investors
 CRISIL Ratings is a full service rating agency that offers a comprehensive range
of rating services. CRISIL Ratings provides the most reliable opinions on risk by
combining its understanding of risk and the science of building risk frame
works ,with a contextual understanding of business
 It offers a comprehensive range of integrated product & service offerings-real
time news, analyzed data , incisive insights & opinions & expert advice-to enable
investors , issuers , policy makers de-risk their business & financial decision
making, take informed investment decisions& develop workable solutions.

8. ICRA
 ICRA was set up by IFCI on 16th January 1991.
 It is a public limited company with an authorized
share capital of Rs.10 crores, Rs. 5 cores is paid up.
 ICRA is major shareholders IFCI (26%), and the
balance by UTI, LIC, GIC,PNB, Central Bank of
India, Bank of Baroda, UCO Bank and banks (SBI) .
 OBJECTIVE -to provide information & guidance to
investors for determining the credit risk associated
with a debt instrument.

9. CARE
 It was setup by IDBI in collaboration with
CANARA banks
 financial service companies in NOV 1993.It
offers services such as credit rating of
debentures/ preference shares / F.D / CP /
information services & equity research
extensive study of the shares listed on major
stock exchanges through EIL (economy,
industry ,company) analysis.

10. RATING POINTS

11. Benefits to Rated Companies
 Sources of additional certification
 Increase the investor population
 Encourage financial discipline
 Merchant bankers job made easy
 Foreign collaboration made easy
 Low cost of borrowing
 Rating as a marketing tool

12. RATING INFORMATION IS HOW THE CREDIT USEFUL TO
INVESTORS
 Safeguards against bankruptcy
 Recognition of risk
 Credibility of the issuer
 Easy understandability (ratings) of the investment proposal
 Savings of resources (time and money)
 Independence of investment and quick investment decision
 Choice of investments
 Good bye to thumb rules
 Benefits of rating surveillance
 Low cost information

13. DISADVANTAGES OF CREDIT
RATING
 Biased rating and misrepresentation,
 Static study,
 Concealment of material information,
 No guarantee for soundness of the company,
 Human bias,
 Reflection of temporary and adverse conditions,
 Present rating may change (down grade),
 Differences in rating of two agencies.

14. THANK YOU