What is a Credit Rating Agency (CRA)?
A credit rating agency (CRA) is a company that rates debtors on the basis of their ability to pay back their interests and loan amount on time and the probability of them defaulting.The concept of Credit Rating Agencies has come into existence from the mid of 1980’s.
These agencies may also analyse the creditworthiness of
debt issuers and provide credit ratings to only organisations and not
individuals consumers. The
assessed entities may be companies, special purpose entities, state
governments, local governmental bodies, non-profit organisations and even
countries.
Who administers these Credit Rating Agencies?
All these CRAs are regulated by SEBI
How is credit rating measured?
The credit rating is measured in grades such as (AA+,A-,BB,C,D,etc...)
How many rating agencies are there in India?
All these CRAs are regulated by SEBI
How is credit rating measured?
The credit rating is measured in grades such as (AA+,A-,BB,C,D,etc...)
How many rating agencies are there in India?
There
are seven credit rating agencies at present which are registered with SEBI. Of them there are 4 limited companies and 3 private limited companies. They
are:
1) CRISIL
- Credit Rating Information Services of India Limited, is established in 1987
and it is the first credit rating agency setup in India. CRISIL has expanded
its business operation to USA, UK, Poland, Argentina, Hong Kong, China and
Singapore apart from India. The majority shareholder of CRISIL is Standard
& Poor’s, one of the biggest credit rating agencies of the world.
2) ICRA
- Investment Information and Credit Rating Agency, is established in 1991. It
was a joint venture of Moody’s and Indian Financial and Banking Services
Organisations. It was renamed as ICRA Ltd and was listed on NSE and BSE in
April, 2007. ICRA has a major focus on MSME sector. ICRA ratings are used to
analyse the credit risk in India. It does not cater to the international
companies and organisations.
3) CARE –
Credit Analysis and Research Limited, is established in 1993 and since then it
has gone on to become India’s second largest credit rating agency. It was
promoted by IDBI and UTI Bank, Canara Bank and other financial institutions.
CARE has
the primary function to perform rating of debt instruments, credit analysis
rating, loan rating, corporate governance rating, claims-paying ability of
insurance companies, etc. It also grades construction entities and courses
undertaken by maritime training institutions. Ratings provided by CARE include
financial institutions, state governments and municipal bodies, public
utilities and special purpose vehicles.
4) SMERA - Small and Medium Enterprises Rating Agency of India (A Division of Acuite Ratings & Research Limited), is established in 2005 especially for the Small and Medium Enterprises. SMERA bought the launch of New Enterprise Credibility score (NECS) in 2018, for start-ups in the country.
5) BWR – Brickwork Ratings India Private Ltd was established in 2007 and is promoted by Canara Bank. It offers ratings for bank loans, SMEs, corporate governance rating, Municipal Corporation, capital market instrument, and financial institutions. It also grades NGOs, tourism, IPOs, real estate investments, hospitals, IREDA, educational institutions, MFI, and MNRE. Brickwork Ratings is recognised as external credit assessment agency (ECAI) by Reserve Bank of India (RBI) to carry out credit ratings in India.
6) India Rating and Research Pvt. Ltd, India Ratings is a wholly-owned subsidiary of the Fitch Group. It offers credit ratings for insurance companies, banks, corporate issuers, project finance, financial institutions, finance and leasing companies, managed funds, and urban local bodies. In addition to SEBI, the company is recognised by the Reserve Bank of India and National Housing Bank.
What is the credit rating process?
The credit rating process followed by CARE, ICRA are given below :
-- CARE
-- ICRA
4) SMERA - Small and Medium Enterprises Rating Agency of India (A Division of Acuite Ratings & Research Limited), is established in 2005 especially for the Small and Medium Enterprises. SMERA bought the launch of New Enterprise Credibility score (NECS) in 2018, for start-ups in the country.
5) BWR – Brickwork Ratings India Private Ltd was established in 2007 and is promoted by Canara Bank. It offers ratings for bank loans, SMEs, corporate governance rating, Municipal Corporation, capital market instrument, and financial institutions. It also grades NGOs, tourism, IPOs, real estate investments, hospitals, IREDA, educational institutions, MFI, and MNRE. Brickwork Ratings is recognised as external credit assessment agency (ECAI) by Reserve Bank of India (RBI) to carry out credit ratings in India.
6) India Rating and Research Pvt. Ltd, India Ratings is a wholly-owned subsidiary of the Fitch Group. It offers credit ratings for insurance companies, banks, corporate issuers, project finance, financial institutions, finance and leasing companies, managed funds, and urban local bodies. In addition to SEBI, the company is recognised by the Reserve Bank of India and National Housing Bank.
7) INFOMERICS VALUATION AND
RATING PVT. LTD., is established in 2015 and it evaluates the creditworthiness of Banks, NBFCs,
Large Corporates and Small and Medium Scale Units.
Link to the official Website of SEBI : Details of Credit Rating Agencies registered with SEBIWhat is the credit rating process?
The credit rating process followed by CARE, ICRA are given below :
-- CARE -- ICRA
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