The document provides an overview of credit ratings in India, detailing the establishment of major credit rating agencies such as CRISIL, ICRA, and CARE, and their objectives and functions. It explains the credit rating scales for both long-term and short-term instruments, illustrating the levels of safety and risk associated with different ratings. Additionally, it outlines international credit rating agencies like Moody's and Standard & Poor's, highlighting their role in assessing financial instruments globally.

1. BY ABHINAV KP
CREDIT RATING FOR
DEBT

2. DEFINITION
According to CRISIL :
“Credit rating is an unbiased, objective
and independent opinion as to an issuer’s
capacity to meet financial obligation.”

3. ORGIN OF CREDIT RATING IN INDIA
• India’s first credit rating agency CRISIL was set up in 29 January 1987.
• It is incorporated, promoted by the erstwhile ICICI Ltd along with UTI
and other financial institutions.
• Mr. NVaghul and Mr. Pradip Shah are CRISIL’S first Chairman and
Managing Director respectively.
• The first private sector credit rating institution in India was DUFFS &
PHELPS CREDIT RATING INDIA PVT.LTD formed in 1995.

4. OBJECTIVES OF CREDIT RATING
• Improves a healthy discipline on borrowers.
• Lends greater credence to financial and other representations.
• 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
• Act as a marketing tool.

5. Credit Rating agencies in India
• CRISIL Limited.
• ICRA Limited.
• Credit Analysis & Research Ltd. (CARE).
• Fitch Rating India Ltd.
• Brickwork India Rating

6. CRISIL
• Global analytical company providing ratings, research, and risk
and policy advisory services.
• India’s leading ratings agency.
• Provides high-end research to the world’s largest banks and
leading corporations.
• Majority shareholder - Standard and Poor’s (S&P).
• Caters to over 1,200 domestic and global clients, through a range
of research reports, analytical tools, subscription products and
customized solutions.

7. A. Long-term Instruments
(i) High investment grades
(a) AAA (Triple A): Highest safety
(b) AA (Double A): High safety
(ii) Investment grades
(a) A: Adequate safety
(b) BBB (Triple B): Moderate safety
CRISIL Credit Rating scale
for Long-Term Instruments

8. • (iii) Speculation grades
• (a) BB (Double B): Inadequate safety
• (b) B: High risk
• (c) C: Substantial risk
• (d) D: Default

9. • Short-term Instruments
• (i) P1: Highest safety
• (ii) P2: High safety
• (iii) P3: Adequate safety
• (iv) P4: Inadequate safety
• (v) P5: Default

10. ICRA
• ICRA Limited (formerly Investment Information and Credit Rating
Agency of India Limited) was set up in 1991 by leading
financial/investment institutions, commercial banks and financial
services companies as an independent and professional Investment
Information and Credit Rating Agency.
• Today, ICRA and its subsidiaries together form the ICRA Group of
Companies (Group ICRA). ICRA is a Public LimitedCompany, with its
shares listed on the Bombay Stock Exchange and the National Stock
Exchange.
• ICRA’s major shareholders IFCI (26%), and the balance by UTI, LIC,
GIC, PNB, Central Bank of India, Bank of Baroda,UCO Bank and
banks (SBI) .
• Alliance with Moody’s Investors Service.

11. ICRAs Long-Term Rating Scale

13. CARE
• CARE is promoted by IDBI jointly with Financial Institutions, Public/Private
Sector Banks and Private Finance Companies
• It commenced its credit rating operations in October, 1993 and offers a wide
range of products and Services in the field of Credit Information and Equity
Research.
• It offers services like :
Credit rating of debt instruments
 Advisory services like securitization of transactions,.
Information services like providing information to companies, industry and
businesses.
Equity research

14. CARE Rating

16. Fitch Rating India Ltd.
• It is the latest entrant in the credit rating business in the
country as a joint venture between the international
credit Rating agency Duff and Phelps and JM Financial
and Alliance Group.
• In addition to debt instruments, it also rates companies
and countries on request.

17. Rating

20. Brickwork India Rating

21. RATING BY BRICKWORK
RATING

23. INTERNATIONAL CREDIT RATING
AGENCIES
•Moody’s Investor Services
•Standard and Poor’s

24. Moody’s Investor Services
 Moody's Investors Service, often referred to as Moody's, is the bond
credit rating business of Moody's Corporation, representing the
company's traditional line of business and its historical name.
 Moody's Investors Service provides international financial research
on bonds issued by commercial and government entities and,
with Standard & Poor's and Fitch Group, is considered one of the Big
Three credit rating agencies.
 The company ranks the creditworthiness of borrowers using a
standardized ratings scale which measures expected investor loss in
the event of default. Moody's Investors Service rates debt securities in
several market segments related to public and commercial securities
in the bond market.

25. Standard and Poor’s
 Standard & Poor's Financial Services LLC (S&P) is an American financial
services company.
 It is a division of S&P Global that publishes financial research and analysis
on stocks, bonds and commodities. S&P is known for its stock market
indices such as the U.S.-based S&P 500, the Canadian S&P/TSX, and the
Australian S&P/ASX 200.
 Its head office is located on 55Water Street in Lower Manhattan, New
York City.

26. Rating Scales used by Major
Credit Raters

27. THANKYOU 