What is a Credit Rating Agency?
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 in India 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.