ROLE OF CREDIT RATING AGENCIES IN

ACHIEVING SUSTAINABLE
DEVELOPMENT

Himanshu Khatik
Avani Parekh
Shubham Bangar
Devika Ghosh
Ashish Sharma
Pratik Giri
Azim Bawa
 Lends credence
healthy discipline 
accounting standards
Marketing tool

OBJECTIVES
Credit
Rating RO
NS LES
NCT
IO Agency
FU Analysis
Information at lower cost​
Criterion for suitable risk Research & Rate ​
and return Loss analysis 
superior information Notifying the sponsor 
corporate image Rating for corporate clients
CREDIT RATING AGENCIES
FRAMEWORK OF CRA

• Regulatory framework
• Regulations change
• Issuer pay model
• Rotation of credit rating agencies
CREDIT RATING PROCESS
Management
Request of the Information Secondary
meetings and
company requirements information
plant visits

Communication Rating committee

Rating Reviews Preview meeting
of decision meeting

Monitoring of
change rating
CREDIT RATING SCALE IN INDIA​
Rating Scale ​ CRISIL ​ CARE ​ ICRA ​ BWR ​ IRR ​
Highest safety: Lowest risk of CRISIL AAA ​ CARE AAA ​ ICRA AAA ​ BWR AAA ​ IND AAA ​
turning into a defaulter ​

High safety: Very low CRISIL AA ​ CARE AA ​ ICRA AA ​ BWR AA ​ IND AA ​
credit risk ​
Low risk ​ CRISIL A ​ CARE A ​ ICRA A ​ BWR A ​ IND A ​
Moderate safety: moderate CRISIL BBB ​ CARE BBB ​ ICRA BBB ​ BWR BBB ​ IND BBB ​
credit risk ​
Moderate risk: Moderate risk of CRISIL BB ​ CARE BB ​ ICRA BB ​ BWR BB ​ IND BB ​
default ​

High risk: High risk of default ​ CRISIL B ​ CARE B ​ ICRA B ​ BWR B ​ IND B ​

Very high risk: Very high risk of CRISIL C ​ CARE C ​ ICRA C ​ BWR C ​ IND C ​
default ​
Default: Instruments are already CRISIL D ​ CARE D ​ ICRA D ​ BWR D ​ IND D ​
in default or on theverge of
default ​
RISKS FACED BY CREDIT RATING
AGENCIES

Methodology Inspection

Historical methods

Transparency

Conflict of Interest

Lack of Competition

Increasing Control of SEBI

STRATEGIES ADOPTED TO CONTROL RISKS

Disclosure of default and transition studies ​

Norms for governance of CRAs ​
Disclosure of all the other activities carried out by CRAs ​
Resolving the conflict of interest​
Requirement of process and compliance audit ​
Diversified ownership ​
A Credit Rating Agency plays a vital role in improving the
growth, stability and efficiency of Economy and markets
• Country's Economy 

• For Intermediary 

• Investors

• At corporate level 
A Credit Rating Agency plays a vital role in improving the
growth , stability and efficiency of Economy and markets

• At consumer level 

• At country level 

•  Increasing the competition