A credit rating estimates the credit worthiness of an individual, corporation, or even a country.

It is an
evaluation made by credit bureaus of a borrower’s overall credit history.[1] A credit rating is also known
as an evaluation of a potential borrower's ability to repay debt, prepared by a credit bureau at the
request of the lender (Black's Law Dictionary). Credit ratings are calculated from financial history and
current assets and liabilities. Typically, a credit rating tells a lender or investor the probability of the
subject being able to pay back a loan. However, in recent years, credit ratings have also been used to
adjust insurance premiums, determine employment eligibility, and establish the amount of a utility or
leasing deposit.

A poor credit rating indicates a high risk of defaulting on a loan, and thus leads to high interest rates, or
the refusal of a loan by the creditor.

The credit rating agencies of India provide credit ratings to the companies that are involved in
offering debt obligations like bonds, debentures and many more to the investors.

These products are traded on the secondary securities market and are provided by several
companies, as well as the national government. The credit rating agencies of India provide a
clear picture of the creditworthiness of a particular financial institution. The creditworthiness of a
particular financial institution describes the financial ability of that company of paying back a
loan and providing good interest rates for the loans.

The credit rating agencies of India measure the creditworthiness of debt obligation providers
through certain processes. These ratings are provided after considering the financial history of
the companies and so on. On the other hand, the value of assets of the companies and present
financial liabilities are also considered for the purpose. These ratings provided by the credit
rating agencies of India are very helpful for the investors because they can get a clear idea of the
expected returns and risk factor involved in the process. At present, these credit ratings are used
for several other purposes like determining the insurance premiums and many more.

The credit rating agencies of India assign the following ratings to the companies: AAA: These
ratings provided by the credit rating firms denote highest safety. This means that the investment
done in the company or in the government bonds are safe and at the same time, the returns and
high interest rates are guaranteed.

AA: Investment in the companies with AA ratings is also very secured. The AA ratings represent
high degree of safety.

A: Companies provided with A rating by the Credit Rating Agencies of India can provide
adequate safety to the investments and there are some risks involved in the process.

BBB: This rating is not negative, but investment in these companies includes some risk factors.
According to the credit rating agencies of India, these companies can provide moderate safety to
the investment.
BB: A company with such rating is eligible for providing sub-moderate safety to the investment.

Credit ratings such as 'B', 'C' and 'D' are somehow negative because these ratings denote
inadequate safety, substantial risk and default respectively. So investing in these companies can
be risky at times.

For further information on the credit rating agencies of

India

   

 CRISIL  DCR India

 ICRA  ONICRA Credit Rating Agency
 Credit Analysis & Research Limited(CARE) of India Ltd.

   
Credit Rating Information Services of India Limited (CRISIL)
Investment Information and Credit Rating Agency of India (ICRA)
Credit Analysis & Research Limited (CARE)
Duff & Phelps Credit Rating India Private Ltd. (DCR India)
ONICRA Credit Rating Agency of India Ltd.
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