ROLE OF

INTERNATIONAL
CREDIT RATING
AGENCIES
BY JENIKA SOLANKI
135 TY BBI
MEANING

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.”
CREDIT RATING
Credit rating evaluates the debtor’s ability to pay back the debt and the likelihood of default.

Credit rating are determined by credit ratings agencies like CRISIL, CARE & S&P.

Credit 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 & municipal bonds,
preferred stock and collateralized securities, such as mortgage-backed securities and
collateralized debt obligations.
  India’s first credit agency CRISIL was
set up in 29 January 1987.
 It is incorporated, promoted by the
ICICI Ltd along with UTI and other
ORIGIN OF financial institutions.
CREDIT  Mr. N Vaghul and Mr. Pradip Shah are
RATING CRISIL’s first Chairman and
AGENCY managing Director respectively.
 The first private sector credit rating
institution in India was DUFF &
PHELPS CREDIT RATING INDIA
PVT LTD formed in 1995.
BENEFITS
Benefits to company
 Improved corporate image
 Good for non popular companies
 Act as a marketing tool
 Reduced costs of borrowings
 Easy to raise resource
 Helps in growth and expansion
Benefits to investors
 Helps in investment decision
 Choice of instruments
 Easy understandability of
investment proposal
 Dependable credibility of issuer
 Advantages of continuous
monitoring
DRAWBACKS
Possibility of bias exit

Improper disclosure may happen

Impact of changing environment

Problems for new companies

Downgrading by rating agencies

Difference in ratings
 CRISIL  It is the largest rating agency in India with
over 65% of Indian market share.
(CREDIT  It was established in 1987, Headquarter-

RATING Mumbai.
 Global analytical company providing ratings,
INFORMATI research and risk & policy advisory services.

ON  It provides high-end research to the world’s

largest banks and leading corporation.
SERVICES  It has been offering its services in
manufacturing, service and financial sectors.
OF INDIA  Standard and Poor’s (S&P) is the major

LIMITED) shareholder of CRISIL with a stake of 56.5%.

ICRA (INVESTMENT INFORMATION &
CREDIT RATING AGENCY)
 It was set up in 1991 by leading financial/investment institutions, commercial
banks and financial services companies as an independent and professional
investment information and credit rating agency.
 ICRA is a public limited company, with its shares listed on the Bombay Stock
Exchange and the National Stock Exchange.
 It is backed by Moody’s is a leading agency that focuses on rating corporate
governance, mutual funds, hospitals, infrastructure development and
construction and real estate companies.
 It was established in 1993 a credit rating
agency promoted and back by IDBI, UTI,
Canara Bank and other financial institutions
and NBFCs.
CARE (CREDIT
ANALYSIS Ratings provided by CARE include financial
organizations, state government and municipal
AND entities, public utilities and special purpose
RESEARCH vehicles.
LIMITED)
It offers a wide range of products and services
in the field of credit information and equity
research.
SMERA (SME RATING AGENCY
OF INDIA LTD.)
 SMERA, a joint venture by several learning banks of the country primarily
focuses on rating the Indian MSME segment.
 It was launched on the 25th Sept. 2005 by the Hon. Finance Minister, Shri P
Chidambaram.
 Joint initiative of SIDBI, Dun & Bradstreet and 11 leading banks operating in
SME segment.
OTHER CREDIT RATING
AGENCIES
Onida Individual
Credit Information
Credit Rating Fitch Rating India
Bureau India ltd. Brickwork Ratings
Agency of India Limited
(CIBIL)
(ONICRA)

Duff and Phelps

Standard & Poor’s Moody’s Investors
Credit Rating
Ratings Services Services
Company
THANKYOU