Prepared By:

VANZARA FARHANA VAISHNAV MEGHAL

INTRODUCTION OF CREDIT RATING

CRISIL:

Ltd. an evaluation of the credit worthiness of a debtor determined by credit ratings agencies

Credit Rating Information Service Of India

DEFINITION: An assessment of the credit worthiness of a borrower in general terms or with respect to a particular debt or financial obligation.

CREDIT RATING AGENCY IN INDIA

CRISIL (CREDIT RATING INFO & SERVICE OF INDIA LTD.)
CARE (CREDIT ANALYSIS & RESEARCH LTD.)
ICRA (INVESTMENT INFO & CREDIT AGENCY OF INDIA LTD.)

FITCH RATING INDIA PVT. LTD.

ABOUT CRISIL

A global analytical company Incorporated in 1987 Provides ratings, research, and risk and policy advisory services. India's 1st largest. Provider of high-end research to the world's largest banks and leading corporations. CRISIL's majority shareholder is Standard and Poor's (S&P) rated 30,000 debt instruments, covering the entire debt market clients includes all the industry majors - 23 of the BSE Sensex constituent companies and 39 of the NSE Nifty constituent companies,

AIM OF CRISIL

To assist both individual and institutional investors in making investment decisions in fixed interest securities; To guide the investors as to the risk of timely payment of interest and principal on a particular debt instrument; To help the companies to raise funds from a large number of investors in larger amounts at a lesser cost; To create awareness of the concept of credit ratings amongst corporations, merchant bankers, brokers, regulatory authorities and help in creating environment that facilitates the debt rating; To provide regulators with a market-driven system in order to ensure discipline and a healthy growth of capital markets.

RANGE OF RATING BY CRISIL

Industrial Banks Non-banking

companies

financial companies (NBFCs) Infrastructure entities Microfinance institutions Insurance companies Mutual funds State governments Urban local bodies

CRISIL Businesses
Ratings

Global

Research & Analytics: (Irevna, Pipal Research) Research CRISIL Risk and Infrastructure Solutions (CRIS)

CREDIT RATING METHODOLOGY

Business

analysis: covers an analysis of industry risk, market position in country, operating efficiency of company & legal position. Financial analysis: covers analysis of accounting quality, earning protection, cash flow adequacy & financial flexibility. Management evaluation: study track record of mgmts capacity to overcome adverse situations, goals, philosophy & strategies. Fundamental analysis: analysis of liquidity mgmt, assets quality, profitability and interest and tax sensitivity.

TYPES OF RATING

FUNCTION OF CRISIL
Credit Rating Service Advisory Services Research & Information Service

Remarks Highest Safety

Debenture AAA

Fixed Deposit FAAA

Structured Obligation AAA(So)

Short-term Safety P1(Very strong safety)

High Safety
Adequate Safety

AA
A

FAA
FA

AA(So)
A(So)

P2(Very safety)
P3(Adequat e safety)

Moderate Safety
Inadequate Safety High Risk Substantial Risk

BBB

BBB(So)

P4(Minimal safety)
P5(Default)

BB

FB

BB(So)

B C

FC -

B(So) C(So)

In default

FD

D(So)