This document discusses credit ratings and the credit rating agencies in India. It provides background on what credit ratings are, who provides them, and who regulates the agencies. It then gives details on the major credit rating agencies in India, including CRISIL, ICRA, CARE, SMERA, and Brickwork Ratings. It explains their rating scales and methodology. The objectives and benefits of credit ratings for both investors and companies are also outlined.

1. Sector :- Financial services
topic credit ratings
Mentor-
PrOF. HEMAL THAKKER
Presented by-
ASHISH DILIP MEHTA

2.  Meaning of credit rating.
"Credit ratings help investors by providing an easily recognizable,
simple tool that couples a possibly unknown issuer with an informative and
meaningful symbol of credit quality." Standard and Poor’s
 Who gives credit rating ?
 What does the rating agency do ?
 Who regulates the credit rating agency ?

3.  It is necessary in view of the 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.
 Maintenance of investor’s confidence, since defaults shatter the
confidence of investors in corporate instruments.
 Protect the interest of investors who can not into merits of the debt
instruments of a company.
 Motivate savers to invest in industry and trade.

4.  The main objective is to provide superior and low cost info to
investors for taking a decision regarding risk return trade off, but it
also helps to market participants in the following ways:
 improves a healthy discipline on borrowers,
 Facilitates formulation of public guidelines on institutional
investments,
 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.  Sovereign credit rating
 Short term rating
 Corporate credit ratings

7. Credit rating methodology focus on 4 areas :
 Business Analysis
 Financial Analysis
 Management Evaluation
 Fundamental Analysis

8. RATING PROCESS

9. GLOBALLY :
 Moody’s.
 Standard &Poor.
 Fitch.
IN INDIA :
 CRISIL
 ICRA
 CARE
 SMERA
 Brickwork ratings
 Fitch

10. Credit Rating Information Services of India Limited
(CRISIL)
 They majorly rate on Banks, SME, NSIC, Real Estate,
Debt Instruments, etc.
 CRISIL almost serves India’s Largest Companies and
some of smaller companies also.

11. BANKS SME DEBT INSTRUMENT
CRISIL AAA SME 1 CRISIL AAA
CRISIL AA SME 2 CRISIL AA
CRISIL A SME 3 CRISIL A
CRISIL BBB SME 4 CRISIL BBB
CRISIL BB SME 5 CRISIL BB
CRISIL B SME 6 CRISIL B
CRISIL C SME 7 CRISIL C
CRISIL D SME 8 CRISIL D

12. FINANCIAL STRENGHT
HIGH MODERATE LOW
SE 1A SE 1B SE 1C
SE 2A SE 2B SE 2C
SE 3A SE 3B SE 3C
SE 4A SE 4B SE 4C
SE 5A SE 5B SE 5C
NSIC
HIGHEST
HIGH
MODERATE
WEAK
POOR
PERFORM-ANCE
CAPABILITY
Rating Scale
DA1
DA2
DA3
DA4
DA5
REAL ESTATE

13. INVESTMENT INFORMATION AND CREDIT RATING
AGENCY OF INDIA.(ICRA)
Health Care Fund Management
Quality
IPO
H1 AMC 1 GRADE 5
H2 AMC 2 GRADE 4
H3 AMC 3 GRADE 3
H4 AMC 4 GRADE 2
- AMC 5 GRADE 1

14. SME RATING AGENCY OF INDIA LTD. (SMERA)
Corporate &
Infrastructure
Bank Loan SME
SMERA AAA’ SMERA AAA’ MSME 1
SMERA AA’ SMERA AA’ MSME 2
SMERA A’ SMERA A’ MSME 3
SMERA BBB’ SMERA BBB’ MSME 4
SMERA BB’ SMERA BB’ MSME 5
SMERA B’ SMERA B’ MSME 6
SMERA C’ SMERA C’ MSME 7
SMERA D’ SMERA D’ MSME 8

15. BRICKWORK RATINGS INDIA PRIVATE LTD.
Corporate
Governance
Fixed Deposits Issuer Ratings
BWR CG 1 BWR FAAA BWR AAA
BWR CG 2 BWR FAA BWR AA
BWR CG 3 BWR FA BWR A
BWR CG 4 BWR FB BWR BBB
BWR CG 5 BWR FC BWR BB
BWR CG 6 BWR FD BWR B
BWR CG 7 - BWR C
BWR CG 8 - BWR D

16. TO THE INVESTORS

17. TO THE COMPANY

18. α Possibility of Bias Exist.
α Improper Disclosure May Happen.
α Impact of Changing Environment.
α Problems for New Companies.
α Downgrading by Rating Agency.
α Difference in Rating.