Credit rating agencies evaluate the creditworthiness of individuals, corporations, and countries to assess their ability to repay debt and likelihood of default. The major credit rating agencies in India are CRISIL, ICRA, CARE, DCR India, ONICRA, and SMERA. Credit ratings provide benefits to both investors and rated companies by reducing information costs and encouraging financial discipline. However, credit ratings also have limitations such as potential bias and differences in ratings between agencies.

1. Presentation On Credit Rating Agencies
GROUP NO. 5
GURUPRASAD
HARISHRILAKSHMI C H
HEMATH SHENOY
JAYASHREE
JAYASHREE ACHAR H

2. Definition and Meaning
According to Moody’s, “ Ratings are designed exclusively for the
purpose of grading bonds according to their investment qualities”.
A credit rating is an evaluation of the credit worthiness of an individual,
corporate or even a country. The evaluation is made by a credit rating
agency of the debtor’s ability to pay back the debt and the likelihood of
default.
Credit rating are based on financial history and current asset and
liabilities

3. Benefits of credit ratings to
Investors
Low Cost Information
Quick Investment Decision
Independent Investment Decision
Investors Protection

4. Benefits to Rated companies
Source of Additional Certificate
Encourages Financial Discipline
Foreign collaborations Made Easy
Merchant Bankers Job Made Easy
 Increase the Investors Population

5. Credit Rating Agencies In India
Credit Rating Information Service Ltd(CRISIL)
Investment Information and Credit Rating Agency of India (IICRA)
Credit Analysis and Research (CARE)
Duff Phelps Credit Rating Pvt.Ltd.(DCR India)
Onida Individual Credit Rating Agency Ltd (ONICRA)
SME Rating agency Ltd( SMERA)

6. CRISIL
It is an Public Ltd Company
Established on January 1, 1987 Mumbai
Started Jointly By ICICI and UTI with an equity capital of
Rs.4crores.
It become Public in 1993
In 1996, it framed a strategic alliances with S & P rating group.
Has 5 offices- Mumbai, Delhi, Kolkata, Chennai and Bangalore

7. OBJECTIVES
To assist both individual and institutional investors in making
investment decisions.
To enable corporates to raise large amounts at fair cost
To enable intermediaries to placing their debt instrument with investors
by providing effective marketing tool.

8. Rating Process

9. Limitations
Possibility of Bias exist
Improper disclosure may happen
Impact of changing environment
Differences in Ratings

10. ICRA
Set up by IFCI on 16th January 1991, but operation started from 15th
March 1991.
Headquarter- Gurgaon, India
Public Limited company with an authorized share capital of
Rs.101crores
IICRA was listed in NSE and BSE on 13th April 2007
Main objective to assist both investors individual and institutional in
making well informed decisions.

11. IICRA Rating Scale
LONG TERM INCLUDING
DEBENTURES BONDS AND
PREFERENCE SHARES
LAAA: Highest safety
LAA: High safety
LA: Adequate safety
LBBB: Moderate safety
LBB: Inadequate safety
LB: Risk prone
LC: Substantial Risk
LD: Default
MEDIUM TERM INCLUDING
DEPOSIT FUND
MAAA: Highest safety
MAA: High safety
MA: Adequate safety
MB: Inadequate safety
MC: Risk prone
MD: Default

12. Short term including commercial paper
A-1 : Highest safety
A-2 : High safety
A-3 : Adequate safety
A-4 : Risk prone
A-5: Default

13. CARE
Promoted in 1993 jointly with Investment companies, Banks and Finance
companies
It commenced its credit rating operations in October 1993
Three largest shareholders of CARE are IDBI Bank, Canara Bank and SBI.
Rating Services
Debentures
Certificate of Deposits
Commercial paper
Fixed Deposit

14. DCR
Founded in 1993 to provide high quality investment research services
focused on utility of industry.
Started its operation in 1996
Its main objective is to give credit rating to debt instrument.
Renamed as Fitch Ratings India Private Limited in 2001 again renamed
as India Ratings and Research Private Limited in 2012

15. ONICRA
Leading Credit and performance credit agencies in India.
It provides ratings, risk assessment and analytical solution to
individuals, MSME’s and corporate.
It has been sponsored by the ONIDA Finance Ltd
Services
Ratings
MSME’S
Vendor & Associate
Grading
APMC
Education
Health Care
Solar energy

16. SMERA
Founded in 2005 by small Industry development Bank of India ( SIDBI)
Headquarter is at Maharashtra, Mumbai
It is a public company which is comprehensive and independent third-party
evaluation of the MSME.
Benefits
Aids in enhancing the credibility of the MSME unit.
Helps open doors to the corporate sector, especially for MSMEs having a
large vendor base.
Facilitates international trade and commerce by building confidence
amongst potential trading partners.
Motivates MSMEs in adopting good governance practices for long term
benefits.

17. CONCLUSION
Credit ratings helps the market regulators in promoting stability and
efficiency in the securities market. Ratings make market more efficient
and transparent.
The credit agencies perform a valuable service that make capital
markets more efficient and stable in the markets.