Subject – FINANCIAL SERVICES

Class –B.B.A./M.B.A.
Topic CREDIT RATING AGENCIES
Key-Words – Sovereign, Qualtitative, Quantitative, Vulnerable, Borrowings

Dr. Dileep Kumar Singh

Institute of Management Studies
Faculty of Commerce and Management Studies
Mahatma Gandhi Kashi Vidyapith Varanasi – 221002
e-mail : singh96906238@gmail.com
CREDIT RATING AGENCIES

Dr. Dileep Kumar Singh

Assistant Professor
Institute of Management Studies
Mahatma Gandhi Kashi Vidyapith
Varanasi

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CREDIT RATING AGENCIES
 TOPICS

• MEANING AND DEFINITION

• INTERNATIONAL AGENCIES
• CREDIT RATING AGENCIES IN INDIA
• REFERENCES
 MEANING
• Credit rating agency means a body corporate
which is engaged in the business of rating of
securities offered by companies.
• The debt instruments rated by CRAs
include government bonds, corporate
bonds, CDs, municipal bonds, preferred stock,
and collateralized securities, such
as mortgage-backed
securities and collateralized debt obligations.
 DEFINITION OF CREDIT RATING
• According to CRISIL, credit rating is “an
unbiased and independent opinion as to
issuer’s capacity to meet its financial
obligations. It does not constitute a
recommendation to buy , sell or hold a
particular security”
• According to Moodys , “ratings are designed
exclusively for the purpose of grading bonds
according to their investment qualities”
 INTERNATIONAL AGENCIES

• MOODY’S INVESTORS SERVICES

• STANDARD AND POOR’S CORPORATION(S &P)
 MOODY’S INVESTORS SERVICES
• John Moody founded the Moody’s agency at
the beginning of the 20th century.
• It undertakes the rating of wide range of debt
related securities , international issues ,
commercial papers , etc. Both in USA and
international markets.
• Other services include- assessing financial
strength of insurance companies , mutual
funds, banks , public utilities.
 STANDARD AND POOR’S
CORPORATION(S &P)
• One of the first credit rating institutions which
has a history of 157 years, founded in the year
1860.
• Offers rating on wide range of debt securities ,
both in the US and overseas markets.
OTHER INTERNATIONAL AGENCIES
• Duff and Phelps Credit Rating Company
• Japan Credit Rating Agency
• Fitch Investors Service
• Thomason Bank Watch
• IBCA Ltd
 CREDIT RATING AGENCIES IN INDIA

• CRISIL
• ICRA
• CARE
• FITCH RATINGS INDIA PVT. LTD.
• ONICRA
• SMERA
• BRICKWORK RATING INDIA PVT. LTD.
 CRISIL
• CRISIL stands for Credit Rating Information Services of
India Ltd.
• Promoted by ICICI Ltd. Along with UTI and some banks
and insurance companies as a public limited company.
• Headquarter – Mumbai.
• Services offered are:
a) Credit rating services
b) Advisory services
c) Research and information services
• CRISIL is the largest credit rating agency in India and
the market leader.
• S & P is the major shareholder of CRISIL with a stake
of 56.5%.
CRISIL DEBENTURE RATING SYMBOLS
SYMBOL SAFETY LEVEL
AAA HIGEST SAFETY
AA HIGH SAFETY
A ADEQUATE SAFETY
BBB MODERATE SAFETY
BB INADEQUATE SAFETY
B HIGH RISK
C SUBSTANTIAL RISK
D DEFAULT
CRISIL FIXED DEPOSIT RATING SYMBOLS

SYMBOL SAFETY LEVEL

F AAA HIGHEST SAFETY

F AA HIGH SAFETY

FA ADEQUATE SAFETY

FB INADEQUATE SAFETY

FC HIGH RISK

FD DEFAULT
 ICRA
• ICRA stands for Investment Information and Credit
Rating Agency Ltd.
• Promoted by IFCI,SBI,UTI(Unit Trust of
India),LIC,GIC(General Insurance
Corporation),HDFC,UCO bank etc.
• Moody’s Investors Service is the largest shareholder.
• Services rendered by ICRA are:
a. Rating services
b. Information services
c. Advisory services
ICRA LONG-TERM DEBT INSTRUMENT
RATING SYMBOLS
SYMBOL SAFETY LEVEL
L AAA HIGHEST SAFETY
L AA HIGH SAFETY
L A ADEQUATE SAFETY
L BBB MODERATE SAFETY
L BB INADEQUATE SAFETY
L B RISK PRONE
L C SUBSTANTIAL RISK
L D DEFAULT
ICRA MEDIUM-TERM INSTRUMENTS(ICLUDING
FIXED DEPOSITS & CERTIFICATES OF DEPOSITS)
SYMBOL SAFETY LEVEL

M AAA HIGHEST SAFETY

M AA HIGH SAFETY

MA ADEQUATE SAFETY

MB INADEQUATE SAFETY

MC RISK PRONE

MD DEFAULT
ICRA SHORT-TERM INSTRUMENTS(INCLUDING
COMMERCIAL PAPER) RATING SYMBOLS

SYMBOLS SAFETY LEVEL

A1 HIGHEST SAFETY

A2 HIGH SAFETY

A3 MODERATE SAFETY

A4 RISK PRONE

A5 DEFAULT
 CARE
• Credit Analysis and Research Ltd
• Incorporated in 1993, is based in Mumbai
• Deals with advisory services, information and credit rating.
• Promoted by UTI, Canara Bank, IDBI and many other reputed
banks and companies dealing with financial services.
• VARIOUS SERVICES OFFERED ARE:
a) Rating Services
b) Credit Reports
c) Valuations
d) Credit Appraisal
e) Reviewing Debt Market
• In 1994 commenced publication of ‘CAREVIEW’ a quarterly
journal of CARE Ratings.
CARE LONG-TERM AND MEDIUM-TERM
INSTRUMENTS RATINGS SYMBOLS
SYMBOLS SAFETY LEVEL
CARE AAA HIGHEST SAFETY
CARE AA HIGH SAFETY
CARE A ADEQUATE SAFETY
CARE BBB MODERATE SAFETY
CARE BB INADEQUATE SAFETY
CARE B SUSCEPTIBLE TO DEFAULT
CARE C HIGH INVESTMENT RISK
CARE D DEFAULT OR LIKELY TO BE IN
DEFAULT
CARE SHORT-TERM INSTRUMENTS RATING
SYMBOLS

SYMBOLS SAFETY LEVEL

PR 1 HIGHEST SAFETY

PR 2 HIGH SAFETY

PR 3 ADEQUATE SAFETY

PR 4 INADEQUATE SAFETY

PR 5 DEFAULT OR LIKELY TO BE IN
DEFAULT
 FITCH RATINGS INDIA PVT. LTD
• DCR India Pvt Ltd or Duffs and phelps Credit rating
India Pvt Ltd was a joint venture between Duffs &
Phelps and Alliance group.
• It was first private sector credit rating agency in India.
• Fitch Investors Service, USA accquired 33% stake in DCR
and has been renamed as Fitch Ratings India Pvt Ltd.
• DCR India Pvt Ltd has played an important role in rating
India’s forex debt obligations.
• Rates the securities of all kinds of companies including
banking and insurance.
• Rating symbols used by Fitch are the same as that of
CRISIL.
 ONICRA
•First Individual Credit Rating agency in India.
Individual Credit Rating is an objective assessment
of the risk attached to a financial transaction with
respect to an individual.
•Promoted by ONIDA, famous for consumer
durables.
•ONICRA was incorporated on the business of
analysis, rating, evaluation and appraisal of
obligation, dues ,debts,commitments of an
individual.
 SMERA
• Founded in 2005
• Headquarters situated in Mumbai
• Exclusively set up for micro, small and medium
enterprises.
• It provides ratings which enable MSME, SME’S,
Corporates to raise bank loans at competitive rates of
interest.
• Registration with SEBI as Credit Rating Agency and
accreditation by RBI as an external credit assesment
Institution to rate bank loans has paved way for SMERA
to rate/grade various instruments such as IPO, NCD’s,
Commercial Papers, Bonds, FD’s etc.
BRICKWORK RATINGS INDIA PVT. LTD.
• Incorporated in 2007
• Corporate office in Banglore
• BWR, A SEBI registered Credit Rating agency has also
been accredited by RBI and empanelled by National
Small Industries Corporation with an objective of
providing strong research based information for Indian
Investors.
• Provides rating services for various capital market
instruments, Financial Instituitions, Muncipal and
Urban Local Bodies.
• BWR also provides other rating services such as
Corporate Governance Ratings, FD Ratings etc.
 TRANS UNION LTD(CIBIL)
• Credit Information Bureau (India) Ltd incorporated in 2000
• India’s first credit information bureau
• Provides credit information rather than credit rating
• It is a repository of information
• Data collected by CIBIL is used for preparing Credit Information
Report, popularly known as CIR.
• Provides information to its members in the form of these Credit
Information Reports
• Members include:
All leading banks, financial institutions ,NBFC, housing finance
companies

CIBIL collects and maintains records of an individual’s payments

pertaining to loans and credit cards.
Short Answer Question:-
1. Write about CRISIL.
2. Explain the Credit rating process of international agencies.
3. What are the various types of international credit rating Agencies.

Long Answer Question:-

1. Discuss any three credit agencies of India.
2. Discuss the methodology of CARE in credit rating services?

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 REFERENCES
• FINANCIAL SERVICES TEXTBOOK FOR
B.COM BY DR.ANTONY THOMAS(M.G.
UNIVERSITY)
• www.wikipedia.org
• www.google.co.in
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