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 The first mercantile credit agency was set up in New York

in 1841 to rate the ability of merchants to pay their financial

obligations. Later on, it was taken over by Robert Dun. This
agency published its first rating guide in 1859.
India was perhaps the first amongst developing countries
to set up a credit rating agency in 1988.
With the increasing market orientation of the Indian
economy, investors value a systematic assessment of two
types of risks, namely business risk arising out of the
open economy and linkages between money, capital and
foreign exchange markets and payments risk.
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 According to S&P Credit ratings help

investors by providing an easily

recognizable, simple tool that couples
a possibly unknown issuer with an
informative and meaningful symbol
of credit quality

According to Moody's A rating is an

opinion on the future ability and legal

obligation of the issuer to make
timely payments of principal and
interest on a specific fixed income
security.
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 To compare the loan on the basis

of quality of credit and loan.

Credit rating agencies also assist
to portfolio monitoring
Credit Rating Credit quality of
transparency.
Credit rating of money market
securities.

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 Helps in Investment Decision

Choice of Instrument
Saves Investor's Time and

Effort

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 Improves Corporate Image

Wider Audience for Borrowing
Helps in Growth and Expansion

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 CRISIL was set up in the year 1987.

It was set up in order to rate the firms and then entered

into the field of assessment service for the banks.

The head office of the company is located at Mumbai and it
has established offices outside India also.
CRISIL is a global analytical company providing ratings,
research and risk and policy advisory services.
CRISIL is the largest credit rating agency in India.
CRISILs majority shareholder is STANDARD and
POORs.
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CONT.......

2) ICRA: ICRA Limited (formerly Investment Information

and Credit Rating Agency of India Limited) was set up in
1991 by leading financial/investment institutions,
commercial banks and financial services companies as an
independent and professional Investment Information and
Credit Rating Agency.
ICRA's five point IPO Grading Scale
IPO Grade 5 Strong fundamentals
IPO Grade 4 Above-average fundamentals
IPO Grade 3 Average fundamentals
IPO Grade 2 Below-average fundamentals
IPO Grade 1 Poor fundamentals
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3) CARE ((Credit analysis and research limited))

CARE Ratings commenced operations in April 1993 and over
nearly two decades, it has established itself as the secondlargest credit rating agency in India. With the rating volume
of debt of around Rs.33,062 bn (as on June 30, 2011).

4) DCR(Duff & Phelps credit rating india limited)

It was founded in 1932 to provide high quality investment
research services focused on the utility industry. Over the
decades, it evolved into a diversified financial services firm
that provides financial advisory, investment banking, credit
rating and investment management services.
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 CRAs should maintain records of the rating

committee.
Information about the historical default rates of their
rating categories.
CRAs should ensure that its analysts do not participate
in any kind of marketing and business development.
CRAs while rating structured finance products, are
barred from providing consultancy or advisory services
regarding the design of the structured finance
instrument.
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 Credit rating is an input for decision making.

A credit rating is not a recommendation to buy, hold

or sell a security. A rating is one of the inputs that is

used by investors to make an investment decision.
Investors expect higher returns for lower rated
instruments.
Rating agencies do not comment on the return being
offered on a security. Also, investors use several other
factors like level of portfolio diversification and
liquidity levels of the security etc. in making
investment decisions.
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