A credit rating agency (CRA) assesses an entity’s (group, company, government, etc.) creditworthiness in general terms or relating to particular debt or financial obligation. These agencies help lenders and investors determine the potential risk involved in lending money to a particular borrowing entity and gauge the entity’s repayment ability based on its past credit behaviour. SEBI (Securities and Exchange Board of India) authorizes and regulates all credit rating agencies in India as per SEBI Regulations, 1999 of the Securities and Exchange Board of India Act, 1992. There are seven credit rating agencies including CRISIL, ICRA, CARE, India Ratings and Research Pvt Ltd, Acuite Ratings & Research, Brickwork Ratings India Pvt. Ltd. and Infomerics Valuation and Rating Pvt. Ltd. that are authorised by SEBI to assess credit ratings.
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How Do Credit Rating Agencies Work?
Credit rating agencies assess and assign credit ratings to entities- including individuals, companies, state governments, countries, non-profit organisations, local government bodies, securities and special purpose entities. Several factors such as financial statements, type and level of debt, lending and borrowing history, debt repayment ability, past credit repayment behaviour, etc. are taken into consideration before assigning a rating to a particular entity. Along with the credit rating of an entity, these credit rating agencies also provide additional inputs to help lenders/ investors and financial institutions analyse and take informed lending/ investment decisions. A good/ high credit rating indicates a higher creditworthiness and a lower risk of default for the lender and thus, may help an entity avail credit more easily and at considerable rates of interest. Credit ratings that are assigned to entities also serve as a benchmark for financial market regulations.
Credit Rating Agencies in India
Seven SEBI registered and authorised credit rating agencies in India are:
Credit Rating Information Services of India Limited (CRISIL)
Set up in 1987, Credit Rating Information Services of India Limited (CRISIL) is one of the oldest credit rating agencies in India. It is operational in countries including the UK, USA, Poland, China, Hong Kong, and Argentina, in addition to India. It evaluates the credit worthiness of commercial entities on the basis of their strengths, market reputation, market share and board. It helps investors make informed investment decisions by providing credit ratings for companies, organisations and banks. Starting from 2016, CRISIL has also ventured into infrastructure rating.
CRISIL’s registered address and contact details are given below:
CRISIL Limited, CRISIL House, Central Avenue,
Hiranandani Business Park, Powai
Mumbai – 400076
Tel: + 91 (22) 33423000
Fax: + 91 (22) 33423810
Investment Information and Credit Rating Agency of India (ICRA) Limited
Established in 1991 and headquartered in Mumbai, Investment Information and Credit Rating Agency of India uses a transparent rating system to assign comprehensive credit ratings to corporates. ICRA is known for assigning corporate governance rating, mutual funds rating, structured finance rating, performance rating, etc.
ICRA’s registered address and contact details are given below:
1105, Kailash Building, 11th Floor 26,
Kasturba Gandhi Marg
New Delhi 110 001
Tel: + 91 (11) 23357940 – 50
Fax: + 91 (11) 23357014
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Credit Analysis and Research (CARE) Limited
Credit Analysis and Research Limited (CARE) started its operations in April 1993. Headquartered in Mumbai, it also has regional offices in New Delhi, Kolkata, Pune, Chandigarh, Ahmedabad, Jaipur, Bengaluru, Coimbatore, Chennai and Hyderabad. CARE offers two categories of bank loan ratings- short-term and long-term debt instruments. Its credit ratings can be used by investors to make informed decisions on the basis of credit risk and risk-return expectations. It can also help companies raise funds to meet their investment needs.
Given below are CARE’s registered address and contact details:
4th Floor, Godrej Coliseum
Somaiya Hospital Road
Behind Everard Nagar
Off Eastern Express Highway, Sion (E)
Mumbai 400 022
Tel: + 91 (22) 566 02871/ 72/73
Fax: + 91 (22) 566 02876
Acuite Ratings & Research (earlier SMERA Ratings Limited)
Established in 2011, earlier known as Small Medium Enterprises Rating Agency Of India Limited is now known as Acuite Rating & Research. It has two key divisions – Bond Ratings and SME Ratings. It evaluates the credibility of existing MSMEs (Micro, Small, and Medium enterprises).
Given below are the credit rating agency’s registered address and contact details:
Unit No.102, 1st Floor, Sumer Plaza
Marol Maroshi Road, Marol
Mumbai 400 059
Tel: + 91 (22) 67141144/45
Fax: + 91 (22) 67141142
Brickwork Ratings India Private Limited
Besides being registered with SEBI, Brickwork Ratings (BWR) is also accredited by RBI and empanelled by NCD, NSIC, MSME ratings and grading services. It has Canara Bank as its leading promoter and strategic partner. It assigns credit rating to bank loans, capital market instruments, municipal corporations and SMEs. Besides, it also grades real estate investments, NGOs, hospitals, MFI, etc. It provides several rating systems depending upon the different financial instruments.
Its registered office address and contact details are:
3rd Floor, Raj Alkaa Park
29/3 & 32/2, Kalena Agrahara
Bangalore – 560 076
Tel: +91 (80) 4040 9940
Fax: +91 (80) 4040 9941
India Ratings and Research Pvt. Ltd.
Formerly known as Fitch Ratings India Pvt. Ltd., determines credit ratings for corporate issuers, financial institutions, managed funds, project finance companies, structured finance companies and urban local bodies. Headquartered in Mumbai, it also has other branch offices in Ahmedabad, Chennai, Delhi, Hyderabad, Bengaluru, Pune, and Kolkata.
Its registered address and contact details are:
Wockhardt Towers, 4th Floor, West Wing
Bandra Kurla Complex, Bandra East
Mumbai 400 051
Tel: + 91 (022) 40001700
Fax: + 91 (022) 40001701
Infometrics Valuation and Rating Pvt. Ltd.
Founded by former finance professionals, bankers and administrative services personnel, Infometrics Valuation and Rating Pvt Ltd is an RBI-accredited and SEBI registered credit rating agency. It offers an unbiased assessment and evaluation of the creditworthiness of banks, non-banking financial companies (NBFCs), small and medium scale units (SMUs)and large corporates. It aims to reduce any kind of information asymmetry amongst lenders and investors. It has transparency as its core value and thus, endeavours to provide accurate and comprehensive reports and credit ratings to all its clients.
Its registered address and contact details are as follows:
Flat No. 104/108, 1st Floor
Sujan Singh Park
New Delhi 110003
Tel:+ 91 (11) 24601142, 24611910, 24649428
Fax No.:+ 91 (11) 24627549
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Q1. How is credit rating expressed/denoted?
Credit ratings are generally expressed using a letter-based system or alphanumeric system with symbols, for example A-, AA+, AAA, A1+, A1- etc.
Q2. How can borrowers benefit from a good credit rating?
A good credit rating indicates a higher credit worthiness and lower risk of default for the lender/ investor and can thus help the borrowing entity access funds more easily and on better terms such as a reasonable rate of interest.
Q3. What is the difference between credit rating and credit score?
Credit rating involves evaluating the creditworthiness of entities, usually governments and businesses, by credit rating agencies such as CRISIL, ICRA, CARE, etc. Credit ratings are usually expressed as letter grades. Whereas, credit scores usually help determine the creditworthiness of individuals and are calculated on the basis of the credit history found in the credit report. Credit scores are computed by four major credit bureaus in India including TransUnion CIBIL, Equifax, Experian and CRIF Highmark. Credit score is a 3-digit number ranging between 300 to 900, where a score closer to 900 is generally considered to be a good score.