This document provides an overview of credit ratings. It discusses how credit ratings are assigned by credit rating agencies to evaluate a company or individual's ability to repay debts. The summary provides high-level information on what credit ratings communicate to investors, how they help companies, and some disadvantages. Credit rating agencies in India are also listed.

1. A PRESENTAION ON
Presented By: Abinash Dash
Under Guidance Of:
Prof. Dr. Umakanta Dash

2. The evaluation of a people or businesses' ability and past performance in paying
debts is actually called Credit rating.
A credit rating is generally established by a credit bureau and used by merchants,
suppliers, and bankers to determine whether a loan should be granted or credit
extended.

4. Credit rating provides investors with rating symbols that carry information in
easily recognizable manner for the benefit of investors to perceive the risk
involved in the investment. It becomes easier for the investors by looking at the
symbol to understand the worth of the issuing company.
An investor needs no analytical knowledge on his part and can understand the
rating symbol. The investor can take quick decisions about the investment to be
made in any particular rated security of a company.
Companies with rated instruments improve their own image and avail of the
rating as a marketing tool to create better image in dealing with its customers
feel confident in the utility products manufactured by the companies carrying
higher rating for their credit instruments.

5. CONTINUE........
 Rating provides motivation to the company for growth as the promoters feel
confident in their own efforts and are encouraged to undertake expansion of their
operations or new projects.
Credit rating provides recognition to a relatively unknown issuer while entering
into the market through wider investor base who rely on rating grade rather than
on 'name recognition'.
Rating is a useful tool for merchant bankers and other capital market
intermediaries in the process of planning, pricing, underwriting and placement of
issues.

6. IMPORTANCE OF CREDIT RATING IN BANK
LOAN
Your credit history contains a lot of information about you financially, such as:
Credit accounts which are open and current, including home or car loans
and credit cards.
Past bankruptcy information.
Court judgments or court writs.
Some of this information, such as filing for bankruptcy, will be kept on your
file for 7 years. Other information, like credit enquiries, applications, accounts
or past court judgments will only be kept on your account for 5 years.

7. CONTINUE........
Personal and commercial accounts which are late or overdue.
Credit applications or enquiries you’ve made both personally and commercially.

8. CREDIT RATING AGENCIES IN INDIA
A credit rating agency (CRA) is a company that assigns credit ratings for issuers
of certain types of debt obligations. There are some top Credit Rating
companies in India mentioned below which are registered with SEBI:
Name of the CREDIT RATING
AGENCIES
Year of commencement of Operations
CRISIL 1988
ICRA 1991
CARE 1993
FITCH INDIA 1996
BRICK WORKS 2008
ONICRA 2000

10. ,
DISADVANTAGE OF CREDIT RATING
Rating is done for a particular instrument to assess the credit risk but it should not
be construed as a certificate for the matching quality of the company or its
management. Independent views should be formed by the public using the rating
symbol.
Findings of the investigation team, at times, may suffer with human bias for
unavoidable personal weakness of the staff and might affect the rating.
Rating done by the two different credit rating agencies for the same instrument of
the same issuer company in many cases would not be identical. Such differences are
likely to occur because of value judgment differences on qualitative aspects of the
analysis in two different agencies.

11. OBJECTIVE
The main object of the study is to learn on need of credit rating in banking sector.
To know the need of credit rating on a loan process.
 How familiar is the credit rating in the firms.
What is the process of rating agency and how they rate a company.
To know what is there in peoples mind about credit rating.
Which peoples are mostly attracted on rating agencies.

12. METHODOLOGY
Investigation methodology is the way to analysis different aspects systematically
to research at a definite solution.
PRIMERY SOURCE
Primary data was collected through the open ended and
close ended questions of the questionnaire, direct interaction with the bank
managers, company authority and contractors are done.
SECONDARY SOURCE
Secondary data collected from Office, Published journal, Project reports and
Internet.
By personal interview with client and other authority of organizations the data
are collected.

13. FINDINGS
Ratings are not a guarantee against loss.
Credit ratings are assigned to companies through Credit rating agency.
The rating given by the agency is very important for:
 Investor
 Contractors
 Small firms
 Loan applier etc.
Credit rating improves corporate images.
Credit Rating Agency analyses the company by its past and present value may
change in future.

14. SUGGESTIONS
No entity shall bear a name having the words “Credit Rating” unless it is
registered as a CRA with SEBI.
All existing CRAs shall incorporate the word ―credit rating‖ in their names.
All registered rating agencies may be required to disclose publicly on their
websites their shareholding pattern and the names of the owners.
The CRAs should publish sufficient information about the assumptions underlying
their rating methodologies.
There should be established policies to restrict analysts from participating in fee
discussions with issuer. These policies are designed to separate those individuals
who sit and negotiate fees from those employees who rate the issue, in order to
mitigate the possibility or perception that a rating agency would link its ratings with
the fees.

15. CONCLUSION
Credit rating has proven itself to be effective instrument of risk assessment in
countries with advanced economy since it demonstrates transparency of an
enterprise. Credit rating reflects financial, sectorial, operational, legal and
organizational sides of companies, which characterize ability and willingness duly
and in full amount to repay obligations.
In world practice, credit rating can be assigned to sovereign governments, regional
and local executive bodies, corporations, financial organizations and etc.