Credit Rating Agencies in India with Headquarters
Download List of Credit Rating Agencies in India with Headquarters. If you are preparing for Banking, SSC, Railways, UPSC, State Level Exams, and other competitive Exams, you are bound to find a few questions on Current Affairs in your General Awareness section on the Credit Rating Agencies in India. Credit Rating Agencies play an important role in the financial ecosystem by evaluating the creditworthiness of entities such as companies, governments, and financial instruments. In Credit Rating Agencies in India like Ind-Ra, CRISIL, ICRA, and CARE have been instrumental in fostering investor confidence and ensuring transparency in financial markets and contribute significantly to the stability and growth of the economy. In India Credit Rating Agencies (CRAs) are regulated by the Securities and Exchange Board of India (SEBI).
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List of Credit Rating Agencies in India (CRAs)
A Credit Rating Agency is a company that assigns ratings to debtors according to their ability to pay back the debt in a timely manner. These agencies provide highly essential risk assessment reports and analytical solutions and assign a definitive credit score to both individuals as well as organizations. These reports are considered important for getting a loan. There are seven top credit rating agencies in India namely-
- CRISIL
- ICRA
- CARE
- Brickwork Rating
- India Rating and Research Pvt. Ltd
- Infomerics Valuation and Acuité Ratings
- SMERA.
What is a Credit Rating?
A credit rating is an assessment of the creditworthiness of a borrower in general terms or with respect to a particular debt or financial obligation. A credit rating can be assigned to any entity that seeks to borrow money — an individual, corporation, state or provincial authority, or sovereign government. A credit rating agency (CRA) is a company that assigns credit ratings, which rate a debtor’s ability to pay back debt by making timely principal and interest payments and the likelihood of default. There are six credit rating agencies registered under SEBI namely, CRISIL, ICRA, CARE, SMERA, Fitch India, and Brickwork Ratings.
CRAs were set up to provide independent evidence and research-based opinion on the ability and willingness of the issuer to meet debt service obligations, quintessentially attaching a probability of default to a specific instrument. Evaluating the creditworthiness of an instrument comprises of both qualitative and quantitative assessments, making credit rating far from a straightforward mathematical calculation.
Major Functions of Credit Rating Agencies
- Rate companies, state governments, local government bodies, non-profit organizations, countries, securities, and special purpose entities.
- Provides the report making it easier for the lender to analyze and come to an informed decision.
- Assess an individual’s or a company’s creditworthiness
- Adequacy of cash flow
- Provides market position of the company within the industry
- Helps in Public policy formation
- Does the evaluation of Industrial risks
- Performs a financial analysis based on accounting quality
- Provides a solid basis for risk and return
- Facilitates the protection of earnings
List of Credit Rating Agencies in India and Headquarters
1. Credit Rating Information Services of India Limited (CRISIL) | ||
Name of Rating Agency | Year of Establishment | Headquarters |
CRISIL | 1987 | Gurgaon, India |
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2. Investment Information and Credit Rating Agency of India (ICRA) | ||
Name of Rating Agency | Year of Establishment | Headquarters |
ICRA | 1991 | Mumbai, India |
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3. Credit Analysis & Research Limited (CARE) | ||
Name of Rating Agency | Year of Establishment | Headquarters |
CARE | 1993 | Mumbai, India |
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4. Acuite Ratings & Research (earlier SMERA Ratings Limited) |
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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). |
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Small and Medium Enterprises Rating Agency of India Limited (SMERA) | ||
Name of Rating Agency | Year of Establishment | Headquarters |
SMERA | 2005 | Mumbai, India |
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5. Brickwork Ratings India Private Limited | ||
Name of Rating Agency | Year of Establishment | Headquarters |
BWR | 2007 | Bangalore, India |
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6. India Ratings and Research Pvt. Ltd. (Ind-Ra) | ||
Name of Rating Agency | Year of Establishment | Headquarters |
Ind-Ra | 1995 | Mumbai, India |
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. |
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7. Infometrics Valuation and Rating Pvt. Ltd. | ||
Name of Rating Agency | Year of Establishment | Headquarters |
– | 1986 | New Delhi, India |
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, endeavors to provide accurate and comprehensive reports and credit ratings to all its clients. |
Who Regulate Credit Rating Agencies in India
The Securities and Exchange Board of India (SEBI) has proposed tighter regulations for credit rating agencies in India. Credit Rating Agencies in India will need to disclose the probability of default of the companies they rated. They need to be more transparent about their methodologies. SEBI has proposed the establishment of a “rating sub-committee.” This committee will oversee CRAs and monitor compliance with regulations. SEBI has also proposed that CRAs be held more accountable for their ratings. CRAs need to pay compensation to investors who suffer losses as a result of incorrect ratings. SEBI has also proposed that CRAs not be permitted to provide advisory services to companies they rate. CRAs will also need to disclose the extent of their ownership and the shareholding pattern of their parent companies.
SEBI’s Detection for CRAs – Credit Rating Agencies in India
- The regulator directed that rating agencies must now disclose the liquidity position of a company being rated.
- If the rating is assigned on the assumption of cash inflow, the agencies would need to disclose the source of the funding.
- Rating agencies must disclose their rating history and how the ratings have transitioned across categories.
- Credit rating firms will also have to analyze the deterioration of liquidity and also check for asset liability mismatch.
Rating Scale used by Credit Rating Agencies in India (ICRA, CARE & CRISIL)
Credit Rating Agencies (CRAs) are institutions that assess the ability of an entity to meet its financial obligations. They provide ratings, such as AAA, AA, A, and so on, which reflect the credit risk associated with a particular entity or instrument. A higher rating indicates lower credit risk and vice versa. These ratings serve as a critical tool for investors, lenders, and policymakers in evaluating the financial health of borrowers. Following are the rating scale used by ICRA, CARE & CRISIL
Rating Definition | CRISIL | ICRA | CARE |
Highest Safety | CRISIL AAA | ICRA AAA | CARE AAA |
High Safety | CRISIL AA | ICRA AA | CARE AA |
Adequate Safety | CRISIL A | ICRA A | CARE A |
Moderate Credit Risk | CRISIL BBB | ICRA BBB | CARE BBB |
Moderate Default Risk | CRISIL BB | ICRA BB | CARE BB |
High Default Risk | CRISIL B | ICRA B | CARE B |
Very High Default Risk | CRISIL C | ICRA C | CARE C |
Default | CRISIL D | ICRA D | CARE D |
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