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    Credit Rating Process New

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    Arbaz Pasha
    Credit rating agencies analyze and assign ratings to financial instruments and entities based on their credit risk. The key agencies approved in India are CRISIL, ICRA, CARE, Fitch Ratings India, ONICRA, and Brickwork Ratings India. They assess entities' willingness and ability to repay debts based on financial information and issue ratings symbols that are easily understood by investors. While ratings provide guidance, they are not recommendations and do not always accurately reflect asset quality or timely report changes in borrowers' creditworthiness.

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    Credit Rating Process New

    Uploaded by

    Arbaz Pasha
    52 views13 pages
    Credit rating agencies analyze and assign ratings to financial instruments and entities based on their credit risk. The key agencies approved in India are CRISIL, ICRA, CARE, Fitch Ratings India, ONICRA, and Brickwork Ratings India. They assess entities' willingness and ability to repay debts based on financial information and issue ratings symbols that are easily understood by investors. While ratings provide guidance, they are not recommendations and do not always accurately reflect asset quality or timely report changes in borrowers' creditworthiness.

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    CREDIT RATING PROCESS NEW

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    Credit rating agencies analyze and assign ratings to financial instruments and entities based on their credit risk. The key agencies approved in India are CRISIL, ICRA, CARE, Fitch Ratings India, ONICRA, and Brickwork Ratings India. They assess entities' willingness and ability to repay debts based on financial information and issue ratings symbols that are easily understood by investors. While ratings provide guidance, they are not recommendations and do not always accurately reflect asset quality or timely report changes in borrowers' creditworthiness.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    52 views13 pages

    Credit Rating Process New

    Uploaded by

    Arbaz Pasha
    Credit rating agencies analyze and assign ratings to financial instruments and entities based on their credit risk. The key agencies approved in India are CRISIL, ICRA, CARE, Fitch Ratings India, ONICRA, and Brickwork Ratings India. They assess entities' willingness and ability to repay debts based on financial information and issue ratings symbols that are easily understood by investors. While ratings provide guidance, they are not recommendations and do not always accurately reflect asset quality or timely report changes in borrowers' creditworthiness.

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    CREDIT RATING

    PROCESS
    GROUP MEMBERS
    1. POUSHALI CHOUDHURY
    2. KALA RAJSHRI
    3. SHIVDARSHAN TARALI
    4. PRANAV HM
    5. ARBAZ PASHA
    WHAT IS CREDIT RATING?
    Credit rating is an analysis of the credit risks
    associated with a financial instrument or a financial
    entity. It is a rating given to a particular entity based
    on the credentials and the extent to which the
    financial statements of the entity are sound, in terms
    of borrowing and lending that has been done in the
    past.
    CREDIT RATING PROCESS
    AGENCIES IN CREDIT RATING
    PROCESS
    There are 6 credit rating agencies approved by the RBI-CRISIL,
    CARE, ICRA, Fitch Ratings India Pvt Ltd, ONICRA Credit Rating
    Agency of India Ltd, Brickwork Ratings India Private Ltd.

    o CRISIL – Credit Rating Information Services of India Ltd 1988


    o ICRA – Investment Information of Credit Rating Agencies of India
    Ltd 1991
    o CARE – Credit Analysis and Research Ltd 1993
    o Fitch Ratings India Pvt Ltd 1914
    o ONICRA- Onida Individual Credit Rating Agency of India 1993
    o Brickwork Rating India’s Pvt Ltd 2007
    ROLE OF CREDIT RATING
    AGENCIES
    1. Process of grading and analysis of the credit risk associated with that
    particular instrument.
    2.Rating based on the relative capacity and willingness of the issuer of
    the instrument to service debt obligations.
    3.Only a guidance to the investors and not a recommendation to buy or
    sell a security.
    4.The ratings are expressed in code number(symbols).These are easily
    understandable by investors.
    5.The rating process is based on information supplied by the issuer and
    also the information collected from various other sources.
    ABOUT THE AGENCIES
    1. CRISIL
    • CRISIL commenced its operations in the year 1987 and it is India’s
    first credit rating agency. The company conducts its operations from 8
    countries including India, US, UK, Singapore, China, Poland,
    Argentina and Hong Kong. However, it has its head office in
    Mumbai.
    • The company provides ratings, analytics, and solutions, research with
    a very good track record of innovation and growth. Standard and
    Poor’s is the majority shareholder of CRISIL.
    2. ICRA
    ICRA was the second rating agency established in the year 1991. It is
    a public limited company and it has its head office in New Delhi.
    Moody’s is the majority shareholder of ICRA. The long-term rating of
    ICRA is exactly similar to CRISIL as shown in the chart above.
    3. CARE
    Then in the year 1993, the next credit rating agency which came up
    was CARE. It has its head office in Mumbai and it is India’s second
    largest credit rating agency.
    It is one of the five partners of international rating agency called ARC
    Ratings.
    THE TABLE BELOW SUMMARIZES THE MEANINGS
    OF THE COMPARATIVE RATINGS OF THE CREDIT
    RATING COMPANIES
    REGULATORY ASPECTS
    • SEBI ( SECURITIES EXCHANGE BOARD OF INDIA),
    Credit Rating Agencies Regulations, 1999 empowers
    SEBI to regulate CRAs operating in India.
    • It is one of the regulatory aspect that is under credit rating
    agencies.
    RBI REPORT (LATEST)
    • Up to 24% defaulters had safe credit rating: RBI
    report

    • The study has concluded that ratings do not always reflect


    the asset quality of borrowers in a timely manner and there
    are concerns over delayed reporting of ratings by banks.
    But despite the limitations, the report says the use of
    external ratings in regulations is inevitable and ways to
    improve agency performance should be explored.
    ROLE OF CREDIT SERVICES

    • They help banks to understand whom to give loans to.


    • The work is made easier and faster to process rightful
    loans with better probability or assurance.
    • It directly reduces non performing assets , Bad debts and
    better Goodwill of the bank.
    • They also help customers understand where they stand
    financially and credible wise and take rightful decisions
    further as to whats right or wrong.

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