Credit Rating Agencies in India-How they differ from Credit Information Companies?

Credit Rating Agencies in India or CRAs are the financial rating agencies or companies who rate the debtors on the basis of their loan repayment ability including the interest levied by the creditors. They also calculate the probability of defaulting the loan amount.

Credit Rating Agencies vs. Credit Information Companies

1. CRAs analyze the creditworthiness of the lenders or debt issuers and provide credit ratings to them.
2. These may be companies, NBFCs, state governments, local governmental bodies, non-profit organizations and also Countries i.e. these credit rating agencies provide credit rating to the said organizations not individuals.
3. Higher credit rating of these entities mean lesser interest rate offered to the organization.
4. Credit score or credit report for the individuals is created by special credit bureaus also know as Credit Information Companies.

Credit Rating Agencies in India with their grading system

There are 6 credit rating agencies in India as per the Reserve Bank of India. They are CRISIL, CARE, ICRA, FITCH Ratings India Pvt. Ltd, Brickwork Ratings India Pvt. Ltd. and SMERA.

Credit Rating Agency	Minimum investment grade credit rating (MIGR)
CRISIL	FA- (FA MINUS)
ICRA	MA- (MA MINUS)
CARE	CARE BBB (FD)
FITCH Ratings India Pvt. Ltd. SMERA	tA-(ind)(FD) SMERA A
Brickwork Ratings India Pvt. Ltd.	BWR FBBB

1. CRISIL Or Credit Rating Information Services of India Limited

CRISIL (“crisil[dot]com/“) is one of the first credit rating agencies in India, and was established in 1987 as a risk and policy advisory and credit rating company based in Mumbai. Basically, CRISIL is a global analytical company providing ratings, research, and risk and policy advisory services. CRISIL’s majority shareholder is Standard & Poor’s, a division of McGraw Hill Financial and provider of financial market intelligence.

They are India’s foremost provider of ratings, data, research, analytics and solutions and operate from India, the US, the UK, Argentina, Poland, China, Hong Kong and Singapore.

CRISIL works with various governments and policy-makers in India and other developing nations to enhance and improve the infrastructure and meet the demands of the region.

Nomenclature of minimum investment grade credit rating (MIGR) of CRISIL ranges from FA- (FA MINUS).

2. ICRA Limited (formerly Investment Information and Credit Rating Agency of India Limited)

ICRA Ltd. (“icra[dot]in/“) is a Gurgaon, Haryana-based investment information and credit rating agency which is also a joint venture between Moody’s investors and many other financial services companies under its wing. ICRA Limited is an Indian independent and professional investment information and credit rating agency.

It was established in 1991, and was originally named Investment Information and Credit Rating Agency of India Limited.

Nomenclature of minimum investment grade credit rating (MIGR) of ICRA ranges from MA- (MA MINUS).

3. CARE Ratings

CARE Ratings (“careratings[dot]com/“) commenced operations in April 1993 and in over 25 years, it has established itself as the second-largest credit rating agency in India. It has emerged as the leading agency for covering many rating segments like that for financial institutions such as banks, sub-sovereigns and IPO grading, state governments and municipal bodies, public utilities and special purpose vehicles.

CARE ratings has partnered with Brazil, Portugal, Malaysia and South Africa to launch International credit rating agency ‘ARC Ratings’.

Nomenclature of minimum investment grade credit rating (MIGR) of CARE ranges from CARE BBB (FD).

4. FITCH Ratings India Pvt. Ltd

FITCH Ratings – India Ratings and Research (Ind-Ra) is India’s one of the most respected credit rating agencies committed to providing India’s credit markets accurate, timely and prospective credit opinions. Built on a foundation of independent thinking, rigorous analytics, and an open and balanced approach towards credit research, Ind-Ra has grown rapidly during the past decade, gaining significant market presence in India’s fixed income market.

Ind-Ra (“indiaratings[dot]co[dot]in“) currently maintains coverage of corporate issuers, financial institutions (including banks and insurance companies), finance and leasing companies, managed funds, urban local bodies, and structured finance and project finance companies. Ind-Ra is recognized by the Securities and Exchange Board of India, the Reserve Bank of India and National Housing Bank.

Ind-Ra is a 100% owned subsidiary of the Fitch Group which is a global leader in financial information services with operations in more than 30 countries. Fitch Group is comprised of: Fitch Ratings, a global leader in credit ratings and research; Fitch Solutions, a leading provider of credit market data, analytical tools and risk services; BMI Research, an independent provider of country risk and industry analysis specializing in emerging and frontier markets; and Fitch Learning, a preeminent training and professional development firm. With dual headquarters in London and New York, Fitch Group is majority owned by Hearst (“hearst[dot]com/“).

Nomenclature of minimum investment grade credit rating (MIGR) of India Ratings and Research ranges from tA-(ind)(FD).

5. Brickwork Ratings India Pvt. Ltd.

Brickwork Ratings – credit rating agency (“brickworkratings[dot]com/“) offers bank loan ratings for external commercial borrowings, term loans, working capital loans, buyers credit, cash credit/packing credit, overdraft, bank guarantees, bill purchase/discounted, and letters of credit.

A leading public sector Canara bank is the promoter and strategic partner of Brickwork.

Nomenclature of minimum investment grade credit rating (MIGR) of Brickwork ranges from BWR FBBB.

6. SMERA

SMERA credit rating agency (“smeraonline[dot]com/“) was founded in 2005 by Small Industries Development Bank of India (SIDBI), Dun and Bradstreet Information Services India Private Limited (D&B) and various public, private sector and other MNC banks of India as only credit rating agencies for Small and medium enterprises.

Grading of various instruments like IPO, bonds, commercial papers, NCDs, fixed deposits, security receipts, etc. is done by SMERA which can be used by all banks for capital adequacy requirements calculation as authorized by the RBI.

Nomenclature of minimum investment grade credit rating (MIGR) of SMERA ranges from SMERA A.

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