Credit Rating Agencies in India

What is Credit Rating?

• A credit rating is an assessment of the creditworthiness of a borrower in general terms or with respect to a particular debt or financial obligation.
• A credit rating can be assigned to any entity that seeks to borrow money — an individual, corporation, state or provincial authority, or sovereign government.

What are Credit Rating Agencies?

1. A credit rating agency (CRA) is a company that assigns credit ratings, which rate a debtor’s ability to pay back debt by making timely principal and interest payments and the likelihood of default.
2. CRAs were set up to provide independent evidence and research-based opinion on the ability and willingness of the issuer to meet debt service obligations, quintessentially attaching a probability of default to a specific instrument.
3. Evaluating the creditworthiness of an instrument comprises both qualitative and quantitative assessments, making credit rating far from a straightforward mathematical calculation.
4. Credit rating agencies in India came into existence in the second half of the 1980s. In India, CRAs are regulated by SEBI (Credit Rating Agencies) Regulations, 1999 of the Securities and Exchange Board of India Act, 1992.
5. There are six credit rating agencies registered under SEBI namely, CRISIL, ICRA, CARE, SMERA, Fitch India, and Brickwork Ratings.

CRISIL

1. This full-service rating agency is the major credit rating agency in India, with a market share of more than 60%.
2. It is offering its services in the financial, manufacturing, service, and SME sectors.
3. The headquarters of CRISIL is in Mumbai
4. The majority stake in CRISIL was held by the world’s largest rating agency Standard & Poor’s.

Credit Analysis and Research Limited Ratings (CARE) Ratings

1. Credit Analysis and Research Limited Ratings was established in 1993.
2. It is supported by Canara Bank, Unit Trust of India (UTI), Industrial Development Bank of India (IDBI), and other financial and lending institutions.
3. This is considered the second-largest credit rating company in India.
4. The headquarters of Credit Analysis and Research Limited Ratings is in Mumbai

Small and Medium Enterprises Rating Agency (SMERA)

1. It is a rating agency entirely created for the rating of Small and Medium Enterprises.
2. It is a joint enterprise by SIDBI, Dun & Bradstreet Information Services India Private Limited (D&B), and some chief banks in India.
3. The headquarters of SMERA is in Mumbai
4. It has accomplished 7000 ratings.

ONICRA Credit Rating Agency

1. It was incorporated by Mr. Sonu Mirchandani in 1993
2. It investigates data and arranges for possible rating solutions for Small and Medium Enterprises and Individuals.
3. The headquarters of ONICRA Credit Rating Agency is located in Gurgaon
4. It has broad experience in performing a wide range of areas such as Accounting, Finance, Back-end Management, Analytics, and Customer Relations. It has rated more than 2500 SMEs.

Fitch (India Ratings & Research)

1. Fitch Ratings is a global rating agency dedicated to providing the world’s credit markets with independent and prospective credit opinions, research, and data.
2. The headquarters of Fitch Ratings is in Mumbai.

ICRA

1. It was created in 1991 by prominent financial institutions and commercial banks in India with a devoted crew of experts for the MSME sector.
2. Moodys, which is considered the International credit rating agency holds the major share.

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