7 Credit Rating Agencies in India and How They Work
Introduction
Think about this very simple question: How do lenders ever get an idea of who is trustworthy enough to lend money? It is simple they will just analyze their creditworthiness.
Now the next question would be how this creditworthiness is defined, that is where the credit rating agencies come in.
They are an authority in power who define the creditworthiness of individuals or businesses. Also, credit rating is a numerical representation of the creditworthiness of a person or a business.
Further creditworthiness is measured by considering businesses' or individuals' income and credit lines.
The lenders refer to the credit rate or score to evaluate borrowers' capacity to repay the amount and any other associated credit risks.
SEBI (Securities and Exchange Board of India) authorized and regulated these credit-rating agencies under SEBI Regulations.
Credit Rating Agencies In India
Whether it's an individual or business credit ratings get into their financial health, track their record of payment, and their economic environment.
Effectively, credit ratings make the financial market fair and transparent by helping everyone understand the risks involved.
Following is the list of 7 credit rating agencies in India
| 1. ICRA (Investment Information and Credit Rating Agency of India) |
| 2. CRISIL(Credit Rating Information Services of India Ltd) |
| 3. CARE(Credit Analysis and Research Ltd) |
| 4. Acuite Ratings & Research Ltd. |
| 5. Brickwork Ratings India Private Ltd. |
| 6. India Ratings & Research Pvt Ltd. |
| 7. INFOMERICS Valuation and Rating Private Ltd. |
1. ICRA
ICRA was established in 1991 and it is an independent and professional investment Information and Credit Rating Agency. ICRA is developed to provide guidance and information to institutional & individual investors and creditors.
What does ICRA do? ICRA rates rupee-denominated debt instruments released by commercial banks, NBFCs, PSUs, manufacturing companies, and municipalities.
ICRA’s Registered Office Address:
B-710, Statesman House, 148, Barakhamba Road, New Delhi, 110001
Email id:
Website:
2. CRISIL
CRISIL was founded in 1987 and it is an S&P global company.
Who does CRISIL serve? CRISIL serves investors, lenders, and regulators by covering banks, NBFCs, PSUs, manufacturing companies, financial institutions, state governments, etc.
CRISIL Registered Office Address:
CRISiIL Lmited, CRISIL House, Central Avenue, Hiranandani Business Park, Powai
Email id:
Website:
3. CARE
CARE was established in 1993.
What does CARE do? CARE provides ratings to companies related to developing bank debt and capital market instruments that involve CPs, corporate bonds & debentures, and structured credit as well.
CARE Registered Office Address:
4th Floor, Godrej Coliseum
Somaiya Hospital Road, Behind Everard Nagar
Off Eastern Express Highway, Sion (E), Mumbai 400 022
Email id:
Website:
4. Acuite Ratings & Research Ltd.
Acuite Ratings & Research Ltd was introduced in the year 2005 (Formerly known as SMERA Ratings Limited)
What does Acuite Ratings & Research Ltd do? Acuite Ratings & Research Ltd provides ratings to companies serving structured finance, corporate, and financial sectors.
Acuite Ratings & Research Registered Office Address:
B-710, Statesman House, 148, Barakhamba Road, New Delhi, 110001
Email id:
Website:
5. Brickwork Ratings India Private Ltd.
Brickwork Ratings India Private Ltd. was established in 2007.
Who does Brickwork Ratings India Private Ltd offer ratings? It ratings to Bank Loans, Fixed Deposits, (NCD), Commercial Paper, Securitised paper, etc.
Brickwork Ratings India Private Registered Office Address:
3rd Floor, Raj Alkaa Park, 29/3 & 32/2 Kalena Agrahara, Bannerghatta Road, Bengaluru – 560 076
Email id:
sharada.s@brickworkratings.com
Website:
6. India Ratings & Research Pvt Ltd.
India Ratings & Research Pvt Ltd was founded in 1995.
What does India Ratings & Research do? It offers ratings to banks, insurance companies, corporate issuers, finance and leasing companies, project finance companies, etc
India Ratings & Research Office Address:
Wockhardt Towers, 4th Floor, West Wing
Bandra Kurla Complex, Bandra East
Mumbai 400 051
Email id:
Website:
7. INFOMERICS Valuation and Rating Private Ltd.
INFOMERICS Valuation and Rating Private Ltd was established in 1986.
To whom do INFOMERICS Valuation and Rating offer ratings? It provided ratings to Banks, NBFCs, Large corporations, and Small and Medium Scale Units (SMUs).
INFOMERICS Valuation and Rating Office Address:
Flat No. 104/106/108 and 303, First Floor & 3rd Floor Golf Apartments, Sujan Singh Park, Maharishi Ramanna Marg, New Delhi – 110003, India
Email id:
vma@infomerics.com, hrd@infomerics.com, info@infomerics.com
Website:
As per the study, about 93% of MSMEs struggle to get external funding only because of gaps like insufficient financial records or poor credit histories.
Different Credit Rating Scales used by Various Credit Rating Agencies in India
| Rating scale | CRISIL | CARE | ICRA | Acuite Ratings & Research Ltd. | Brickwork Ratings India Private Ltd. | India Ratings & Research Pvt Ltd. | Informerics Valuation and Rating Private Ltd. |
| High safety & lowest credit risk | CRISIL AAA | CARE AAA | ICRA AAA | ACUITE AAA | BWR AAA | IND AAA | IVR AAA |
| High safety & low credit risk | CRISIL AA | CARE AA | ICRA AA | ACUITE AA | BWR AA | IND AA | IVR AA |
| Fair level | CRISIL | CARE | ICRA | ACUITE | BWR | IND | IVR |
| safety & low credit risk | A | A | A | A | A | A | A |
| Moderate safety & Moderate credit risk | CRISIL BBB | CARE BBB | ICRA BBB | ACUITE BBB | BWR BBB | IND BBB | IVR BBB |
| Moderate risk of default | CRISIL BB | CARE BB | ICRA BB | ACUITE BB | BWR BB | IND BB | IVR BB |
| High risk of default | CRISIL B | CARE B | ICRA B | ACUITE B | BWR B | IND B | IVR B |
| Very high risk of default | CRISIL C | CARE C | ICRA C | ACUITE C | BWR C | IND C | IVR C |
| Instruments are in default | CRISIL D | CARE D | ICRA D | ACUITE D | BWR D | IND D | IVR D |
Remember: Your credit rating is your financial reputation.
How Do Credit Rating Agencies Work?
- The credit rating agencies examine an individual or business entity and assign ratings to them.
- These agencies have all the authority to rate businesses, companies, NGOs, individuals, and any other special-purpose entities.
- They consider many factors before settling on a rating, the first one is financial statements, then followed by the type of debt, borrowing and lending history, the capability of repayment, past behavior with credit, and much more.
- Moreover, credit rating agencies will not give any sort of advice to financial institutions on whether to lend a loan to an entity or not.
- What they all do is provide reports and other required inputs to make the journey of lenders easy while giving them a quick choice of making a decision.
Conclusion
Credit rating agencies for lenders:
- Helps make them better investment decisions
- Assure them that their money is in safe hands
Credit rating agencies for borrowers:
- With a high rating, you will look like a no-risk customer
- You will be able to enjoy the lower rate of interest on loans,
In all, credit rating agencies help individuals and businesses make informed financial decisions while strengthening their position in the financial market.
FAQ’s
1. Which is the 1st credit rating agency in India?
CRISIL is the very first credit rating agency in India.
2. Who controls credit rating agencies in India?
SEBI(Security and Exchange Board of India) is the first primary authority that controls credit rating agencies.
3. How many credit rating agencies are regulated by RBI?
There are 6 rating agencies (CRISIL, CARE, ICRA, SMREA, Brickwork Rating, and India Rating and Research Pvt.) that are regulated by RBI
4. What is the role of credit rating agencies in India?
Analyse and assign credit ratings and help borrowers, investors and lenders make informed decisions.
