About Credit Rating Agencies-
Credit Rating Agencies: Credit rating is the process of credit risk valuation for the corrate debt instruments reflection borrower's expected capability and inclination to pay Interest and principle in a timely manner. The concept was first time introduced by John Moody in 1909.
Methodology:-A ration exercise is done at the request of the company, It applies to a particular debt obligation of the company and is not a general purpose evolution of the company.
Credit Rating Agencies in India
Credit Rating Agencies (CRA) assess creditworthiness of organisation and different entities. In simple words, these agencies analyse a debtor’s ability to repay the debt and also rate their credit risk. All the credit rating agencies in India are regulated by SEBI (Credit Rating Agencies) Regulations, 1999 of the Securities and Exchange Board of India Act, 1992. There are a total of six credit agencies in India viz, CRISIL, CARE, ICRA, SMREA, Brickwork Rating, and India Rating and Research Pvt. Ltd. Top Credit Rating Agencies in India
(1) Credit Rating Information Services of India Limited (CRISIL): - CRISIL is one of the oldest credit rating agencies in India. It was launched in the country in 1987 following which the company went public in 1993. Headquartered in Mumbai, CRISIL ventured into infrastructure rating in 2016 and completed 30 years in 2017. CRISIL acquired 8.9% stake in CARE credit rating agency in 2017. It launched India's first index to benchmark performance of investments of foreign portfolio investors (FPI) in the fixed-income market, in the rupee as well as dollar version in 2018. The company’s portfolio includes, mutual funds ranking, Unit Linked Insurance Plans (ULIP) rankings, CRISIL coalition index and so on.
(2 ) ICRA Limited :- ICRA Limited is a public limited company that was set up in 1991 in Gurugram. The company was formerly known as Investment Information and Credit Rating Agency of India Limited. Before going public in April 2007, ICRA was a joint venture between Moody’s and several Indian financial and banking service organisations. The ICRA Group currently has four subsidiaries - Consulting and Analytics, Data Services and KPO, ICRA Lanka and ICRA Nepal. At present, Moody’s Investors Service, the international Credit Rating Agency, is ICRA’s largest shareholder. ICRA’s product portfolio includes rating for - corporate debt, financial rating, structured finance, infrastructure, insurance, mutual funds, project and public finance, SME, market linked debentures
(3) Credit Analysis and Research limited (CARE):- Launched in 1993, CARE offers credit rating services to areas such as corporate governance, debt ratings, financial sector, bank loan ratings, issuer ratings, recovery ratings, and infrastructure ratings. Headquartered in Mumbai, CARE offers two different categories of bank loan ratings, long-term and short-term debt instruments. The company also offers ratings for Initial Public Offerings (IPOs), real estate, renewable energy service companies (RESCO), financial assessment of shipyards, Energy service companies (ESCO) grades various courses of educational institutions. CARE Ratings has also ventured into valuation services and offers valuation of equity, debt instruments, and market linked debentures. Moreover, the company has launched a new international credit rating agency ‘ARC Ratings’ by teaming up with four partners from South Africa Brazil, Portugal, and Malaysia. ARC Ratings has commenced operations and completed sovereign ratings of countries, including India.
(4) Brickwork Ratings (BWR):- Brickwork Rating 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.
(5) 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.(6) Small and Medium Enterprises Rating Agency of India (SMERA): - Established in 2005, SMERA is a joint initiative of SIDBI, Dun & Bradstreet India and leading banks in India. SMERA has joined hands with prominent institutions such as IIT Madras, The Bangladesh Rating Agency Limited, CAFRAL, CoinTribe, and SIES. Apart from its shareholder banks, SMERA has also entered into MoUs with over 30 Banks, Financial Institutions and Trade Associations of the country. #Credit rating agency-Established year- service- Head quarter. (1) Credit Information Bureau India limited(2000): Research, Risk and Policy Advisory -Mumbai.
(2) Small and Medium Enterprises Rating Agency(2005): Research, Risk and Advisor-Mumbai .
(3) Credit Analysis and Research Limited (1993): Credit Rating Risk- New Delhi.
(4) Investment Information and Credit Rating Agency (1991):Credit Rating and Financial Consulting-Gurgaon(Haryana).
(5) Bric Work India (2007): Research, Risk and Advisory-Bangalore(Karnataka).
(6) Credit Rating Information Services of India Limited (1987): Research, Risk and Policy Advisory-Mumbai.
(7) Moodys Investor Service (1909): Bond Market- New york , USA City.
(8) Fitch Rating (1913): Financial Services-New York City, USA and London, UK .
(9) Standard and Poor (1860): Financial Services-New York city, USA City.