Credit ratings are evaluations of a debtor's ability to pay back loans which are conducted by credit rating agencies. They analyze companies' financial statements and industry reports to assess creditworthiness and assign ratings. Ratings are used by investors, lenders, and companies and influence the interest rates debtors receive. While important for accessing credit, some have criticized the opacity of rating methodologies and their failure to fully reflect countries' economic fundamentals like India's.

1. CREDIT RATING
PRESENTED BY : SHREYA RAWAT
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2. INTRODUCTION
• Creditworthiness : focal point of debt processing
• Credit rate reflects creditworthiness
• Lending party ensures management of risk

3. Meaning
• Credit rating is analysis of credit risks
• Based on credentials and financial statements
• To determine ability to meet debt obligations
• Assessment of solvency
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4. Who evaluates?
• Credit Rating Agency ( CRA)
• 3 prominent: Moody’s, Standard and Poor’s and Fitch
• Indian agencies: Authorized by SEBI; CRISIL, ICRA, CARE, India Ratings
and Research private ltd., SMERA
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5. Sources used by CRAs
INTERNAL SOURCES
• Audited financial statements, annual reports
EXTERNAL SOURCES
• Analyst reports, published news articles, industry analysis

6. Who uses credit ratings?
• Institutional and individual investors
• Intermediaries
• Debt issuers
• Businesses and corporations
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7. Types of Credit Ratings
• Equity credit ratings
• Preferential shares credit ratings
• Bonds and debentures credit rating

8. Why in news in India recently?
• Economic survey 2021
• India’s sovereign rating does not reflect its fundamentals.
• Economist Subramaniam said “ Make India’s credit rating
methodology transparent.”
• Moody’s credit rating India : Baa3 (lowest in 22 years)
• High NPAs, low GDP growth

9. Conclusion
• Credit rating Important as determines approval for loans
• Determines interest rate
• Helps investors determine whether to purchase bonds
• Crucial in Banking and corporate arena

10. THANK YOU !