NAME :- JIDNYASA CHINCHAY

CLASS :- TYBMS FINANCE

SUBJECT:-INNOVATIVE FINANCIAL SERVICES

ROLL NO: - 08

CREDIT RATING AGENCIES IN INDIA

Credit rating ensures that person has not defaulted in single loan amount taken by him .It is
three digit number , higher the number , higher the credit rating of an individual and more
easily he can apply for any loan that he wants ,for example home loan, car loan , personal
loan and many more.

There are six credit rating agencies in India there are as follows: - s CRISIL Ltd, India Ratings
and Research Pvt Ltd, ICRA Limited, CARE, Brickwork Ratings India Pvt Ltd, SMERA Ratings
Limited, and Info metrics Valuation and Rating Pvt Ltd.

Credit score is determined on the following factors: -

Payment history: - 35%

Credit duration: - 30%

Credit history duration: - 15%

Credit mix: - 10%

New credit: - 10%

Credit rating agencies ensures an individual or a company does not default on loan taken or loan give
n to any individual or a company. Their assets are self sufficient to pay off any loan, if defaults.

Credit rating agencies works under SEBI guidelines and they have to follow SEBI ACT 1992.

HOW DOES CREDIT RATING AGENCY WORKS?

Credit rating accounts companies, individual, governments, non-profit organisations, etc has the
authority to give rating to these organisations on account of credibility, reliability, books of accounts
and debt re-pay ability. They ensure a proper rating is being provided to these organisations, so
people trust them and apply or take loan from Them.

credit rating agencies are follows: -

CRISIL Credit Rating Information Services of India Limited

Limited: (CRISIL), one of the oldest credit

rating agencies, was set up in 1987. The agency stepped on to infrastructure rating in 2016. CRISIL
has been operational in countries such as the USA, UK, Poland, Hong Kong, China, and Argentina in
addition to India.

India Ratings and Research Pvt

Ltd: India Ratings and Research, a wholly-owned
subsidiary of
Fitch Group, provides accurate and timely credit opinions on the country’s credit market. The firm
covers corporate issuers, financial institutions, managed funds, urban local bodies, project finance
companies, and structured finance companies. The headquarters is in Mumbai and the other branch
offices are in Ahmedabad, Delhi, Chennai, Bengaluru, Hyderabad, Pune, and Kolkata.

ICRA The Investment Information and Credit Rating

Limited: Agency (ICRA), a joint venture of

Moody’s and Indian Financial and Banking Service Organisation was established in 1991. The
organisation is known for assigning corporate governance rating, performance rating, mutual funds
ranking, and more.

CAR Credit Analysis and Research Limited (CARE) is

E: a credit rating agency that is operational

since April 1993. The agency provides a credit rating that helps corporates to raise funds for their
investment requirements. Investors can make decisions based on credit risk and risk-return
expectations. In addition to the head office in Mumbai, the firm has regional offices in New Delhi,
Pune, Kolkata, Chandigarh, Jaipur, Ahmedabad, Bengaluru, Chennai, Coimbatore, and Hyderabad.

Brickwork Ratings India Pvt In addition to registering with SEBI, Brickwork

Ltd: Ratings (BWR) is

accredited by RBI and empanelled by NSIC, NCD, MSME ratings and grading services. It has
received accreditation from NABARD for MFI and NGO grading. Brickwork is also authorised to grade
companies seeking credit facilities from IREDA, Renewable Energy Service Providing Companies
(RESCOs) and System Integrators (SIs). Canara Bank was the leading promoter and strategic
planner for Brickwork.

SMERA Ratings SMERA analyses and establishes the credibility

Limited: of existing micro, small,

and medium enterprises (MSMEs). MSMEs can improve, grow, and avail cheaper/faster loans.

informetric Valuation and Rating Pvt

This SEBI-registered, RBI-accredited credit
Ltd:
rating
agency was founded by finance professionals, former bankers, and administrative services personnel.
It evaluates entities such as banks, non-banking financial companies, large corporates, and small and
medium scale units (SMUs). Conclusion: - credit rating agency is very beneficial for all individuals as
well as customers.
 Consumer finance in India
In pre dominant era, taking loan was very expensive so people used to think twice before taking any
loan because interest rates were so high back then, but today in modern India, more than 65%indian
consumers take loan on every product they desire for example, car, house, bike, electronic
appliances and watches and many more because this time interest rates are cheaper compared to
back then. So, more people can take loan according to their preferences. But today not easily much
of the consumer gets loan because of the credit rating given to individuals by these agencies. If you
have higher credit rating then more easily you get loan on anything.

Why more and more people take loans in modern India?

Because today s modern day Indian thinking is that, why to pay all money for the product if you can
use the product and pay it in parts. There is much more savings left to a consumer, because of which
more and more take loan. By taking more and more loan, the CIBIL score also increases and it
increases market reputation of an individual.
In India, more and more people are becoming savings savvy.

Compared to previous generation, more people are engaged in savings because of they want to live a
cherish life in their retirement, where ever they can save money they save money .

One of the main benefits of loan, it reduces tax of people.so interest rate are very less also.

So why don’t take the opportunity of this.

They are many credit giving agency at low cost and some no interest rates, because of this more and
more people are taking benefit of this.

merging global evidence shows that digital credit is making loans accessible, including to customers who do
not usually borrow from formal lenders. Estimates suggest that the digital lending market could almost double
in the next five years. If properly regulated, digital credit might help consumers better capture opportunities
and manage economic shocks. However, in some regions, the rapid growth of digital consumer credit (a subset
of the digital credit offering) has exacerbated customers’ vulnerabilities, especially poor customers. As media
reports of abusive lending practices emerge amid India’s digital consumer credit boom, the country can steer
digital credit in a more promising direction by ramping up its efforts to listen to consumers and taking the
nWhile there is no official count of the number of digital consumer credit apps in India, CGAP’s ongoing
research suggests that there are at least 157 apps operating as of July 2021. In the digital lending value chain,
these apps follow one of two dominant models: one where nonbank finance companies (NBFCs) and banks
lend directly to customers, and the other where fintech entities partner with NBFCs and banks to originate
loans, assess borrowers’ creditworthiness and recover loans. Both categories generate distinct kinds of issues
that affect customers, which are outlined in the roundtable proceedings. In addition to these two models,
there are unregulated digital lenders that only use apps to lend out from their own funds. Necessary actions
are taken .

Since digital consumer credit apps are accessed through smartphones, and women in India are about 36% less
likely than men to own smartphones, we hypothesize that the consumer segment is largely young men,
residing in urban or peri-urban locations. Interest rates appear to be high and are estimated to range between
360% to 1,200%, on an annualized basis.

Digital lenders in India also seem to be following a practice of “debt-shaming.” While installing some loan apps,
borrowers are forced to provide consent to loan apps to access contact lists, call history, SMS logs, Facebook
location, phone gallery and a host of other information. Digital consumer credit apps then use this data in case
of delayed or missed payments to pressure borrowers into repayments. An article earlier this year in the Ken
offered a glimpse of the toll this is taking on consumers.

While digital consumer credit companies have made it easier than ever for people in India to borrow money,
the official channels to report abuses have not become any more user-friendly. For filing a complaint against a
regulated entity, the Reserve Bank of India (RBI) prescribes specific formats and communication protocol that
are not always easy to access or follow. Instead of using these channels, customers often voice their
experiences on social media where they have reported abusive collection practices.
PLASTIC MONEY IN PANDEMIC SITUATION IN INDIA
Internet banking has being increased in situation of pandemic .when there was outbreak of corona during
,most people preferred online banking because everything was shut nothing was open only major
supermarkets like Dmart and jio stores and many more took the initiatives and started online deliveries across
everyone homes ,only problem was that major retailers only took online payments ,because of that online
payment boomed in 2020 and 2021.More and more people were engaged in digital payments, even small
retailers were scared to take physical currency so they started accepting online payments only .

Pandemics were tough times for everyone for sure, but it got gone 4 to 5 months of strict lockdown
everything’s were open after 4to 5 months, still everyone were taking precautions and to cooperate with
physical currency.
Major companies like Paytm, google pay and phone pay customer base skyrocketed during this lockdown.

Only these major giants of digital transactions were making the digital payments, so easy so even a child can
use them, unlike the major bank’s complex digital payments app.

I personally use them they are very hectic to use them and have a lots options, anyone can get confuse of so
many options.

These giants were the only source of digital payment for customers. They loved using them .

One of the major benefits of using them is cashback offers and discount coupons from different brands,
because of them it was getting addicted to use them, even I use them for discount coupons from different
brands like Zomato, lens kart, mamas earth.

The rapid adoption of digital payment platforms especially for utilities, peer-to-peer transactions as well as e
commerce has led to a massive spike in digital payments. Walmart-owned fintech company PhonePe has seen
its new user acquisitions swell by 50 per cent during the Covid-19 pandemic with a record 550 million
transactions in June alone.

The pandemic has certainly provided a push to digital transactions across the ecosystem. The simplicity, safety,
and speed of UPI has made it a popular choice amongst Indians and has brought in millions of new digital
payment users into the market.
During the lockdown months, the biggest spike was in recharges and bill payments and we also observed users
helping their family members, friends and household staff do digital transactions on PhonePe. We also saw a
significant spike in person-to-person payments as well as use cases like food, grocery and medicines, digital
gold, online doctor consultations and online games. Grocery purchases at offline stores grew both in terms of
volume as well as ticket size.
During the lockdown’s months, our new user acquisition numbers increased by 50% and digital payments were
being adopted by users across age groups, income levels, and locations. Our transaction volume for June at
over 550 million transactions was back to February 2020 levels (pre-lockdown) and our July activity is even
higher than that.
As digital payments assume greater significance, what are your expectations from the regulators/ govt?

Digital payments are going through a purple patch for the past few years. The government and regulators have
done a lot to promote digital payments and we look forward to the financial regulators and the government to
unblock and fast-track some of the critical regulations and policies.
For instance, if we can get to a paperless, non-physical method of doing Know Your Customer (KYC)
verification, the markets open up across payments, mutual funds, insurance and other financial services, it will
give a huge boost to the entire digital payment’s ecosystem. It is time for a bunch of high-impact policy
clearances to come in to remove the growth inhibitors.