Credit Rating Agencies in India

Credit Rating Agencies in India play a vital role in the economy by accurately evaluating the creditworthiness of individuals and companies, which helps reduce the risk of debt repayment failure.

 Let us explore in detail the different credit rating agencies in India."

What does credit rating mean?

Credit rating agencies (CRAs) are responsible for evaluating and determining the creditworthiness of companies and individuals. These agencies determine your creditworthiness by evaluating factors such as credit history, income, and financial obligations. It assesses the ability to repay debts and identify credit risk.

List of Credit Rating Agencies in India

Below is the list of credit rating agencies in India:

1.       Credit Rating Information Services of India Limited (CRISIL)

A leading global analytics firm, CRISIL is top supplier of rating, data, research, analytics and solution in India. Owned by S&P Global Inc., a global leader in providing unbiased and fair ratings, analytics, benchmarks and data to the commodity and capital markets.

• Address: CRISIL Limited, CRISIL House, Central Avenue, Hiranandani Business Park, Powai Mumbai – 400076
• Contact: Tel: + 91 (22) 33423000Fax: + 91 (22) 33423810Email: info@crisil.com

2.       Credit Analysis and Research (CARE) Limited

 CareEdge Rating (CARE Rating Ltd.) is one of the top credit rating companies in India. Started its operations in April 1993, CareEdge offers real-time research on all national and international economic trends. The knowledge-based organization has an industry research team that constantly monitors and produces sector reports.

• Address: 4th Floor, Godrej Coliseum Somaiya Hospital Road Behind Everard Nagar Off Eastern Express Highway, Sion (E)Mumbai 400 022
• Contact: Tel: + 91 (22) 566 02871/ 72/73Fax: + 91 (22) 566 02876Email: care@careratings.com

3.       Brickwork Ratings India Private Limited

Registered with SEBI and authorized by the RBI, Brickwork Ratings (BWR), a credit agency provides a rating for NCDs, fixed deposits, bank loans, commercial paper, securitized paper, and other financial instruments. Canara Bank is the promoter and strategic partner of Brickwork Ratings.

• Address: 3rd Floor, Raj Alkaa Park29/3 & 32/2, Kalena Agrahara Bannerghatta Road, Bangalore – 560 076
• Contact: Tel: +91 (80) 4040 9940Fax: +91 (80) 4040 9941

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

Formerly known as Investment Information and Credit Rating Agency of India Limited, ICRA Limited, was founded by leading financial institutions, commercial banks, and financial services firms in 1991. ICRA was formed to serve as an independent and expert investment information and credit rating agency. It is a public limited company listed on both the National Stock Exchange and the Bombay Stock Exchange.

• Address: 105, Kailash Building, 11th Floor 26, Kasturba Gandhi Marg New Delhi 110 001
• Contact: Tel: + 91 (11) 23357940 – 50Fax: + 91 (11) 23357014Email:info@icraindia.com.

5.       Acuite Ratings & Research (earlier SMERA Ratings Limited)

Acuite Ratings and Research is SEBI registered and RBI-authorised credit rating agency. As India's leading credit rating and research organization, Acuite Ratings and Research provides clients with the insights to make wise and informed decisions. As a leading global provider of data and analytics, Dun & Bradstreet's co-promotion benefits the agency. 

• Address: Unit No.102, 1st Floor, Sumer Plaza Marol Maroshi Road, Marol Andheri (East) Mumbai 400 059
• Contact: Tel: + 91 (22) 67141144/45Fax: + 91 (22) 67141142

6.       Infometrics Valuation and Rating Pvt. Ltd.

As a SEBI-registered and RBI-authorised credit rating agency, Infomerics Valuation and Rating Pvt. Ltd., aims to reduce information asymmetry between lenders and investors and connect borrowers and issuers with various fund-raising options and channels.
 

• Address: Flat No. 104/108, 1st Floor Golf Apartments Sujan Singh Park New Delhi 110003
• Contact: Tel:+ 91 (11) 24601142, 24611910, 24649428Fax No.:+ 91 (11) 24627549E-mail:vma@infomerics.com

7.       India Ratings and Research Pvt. Ltd.

India Ratings and Research Pvt. Ltd. offers accurate, fast, and prospective credit opinions. The company has a considerable market position in India’s fixed-income market with its foundation of independent thinking, rigorous analytics, and an open and fair approach to credit research.

• Address: Wockhardt Towers, 4th Floor, West Wing Bandra Kurla Complex, Bandra East Mumbai 400 051
• Contact: Tel: + 91 (022) 40001700Fax: + 91 (022) 40001701Email: investor.services@indiaratings.co.in

Types of Credit Ratings 

Different credit rating agencies use two broad categories of credit rating. Within these two board categories, credit rating agencies use slightly different terminology to classify credit rating.

• Investment Grade

Credit rating in the investment grade category signifies that a particular corporate entity has displayed strong financial management and is considered to be of relatively low risk. With the help of these ratings, you can tell whether the borrower is likely to meet the financial obligations and repay his debts. Companies with favorable investment grade ratings can easily secure loans with slightly favorable interest rates.

• Speculative Grade

Credit ratings in the speculative-grade category signify a higher level of risk associated with the corporate borrower. These ratings suggest that the entity has made riskier investments or may face financial challenges that could affect its ability to pay back the debts. Borrowers with unfavorable speculative-grade ratings may face difficulties in getting loans and may be charged with higher interest rates due to the perceived higher risk.

Different Credit Rating Scales

Various credit rating agencies in India use different credit rating scales to assess the creditworthiness of entities. Alphabetical symbols (AAA, AA, A, B, etc.) are used as credit ratings to assess the creditworthiness of corporate financial instruments. Investors, lenders, and other stakeholders use these credit rating scales to evaluate the financial health and repayment capabilities of entities. The below tables are from agencies like ICRA, BrickWork, CRISIL, CARE, and India Ratings and Research, providing an assessment of the default risk associated with each rating category.

Credit Rating Scale - High Safety, High Safety, and Low Risk

The below scale ranges from high safety to low risk:

Credit Rating Scale - Moderate Safety and Moderate Default Risk

The below scale ranges from moderate safety and credit risk levels.

Credit Rating Scale - High Risk, Very High Default Risk, and Defaulted Instruments

The below scale ranges from high risk and very high default risk, along with a category for defaulted or about-to-default instruments.

Factors Affecting Credit Ratings in India

The following are the factors affecting credit rating in India:

• Past repayment behavior: Credit rating agencies track the previous repayment history. Repayment of debts on time indicates good financial behavior while default or any late payment negatively impacts the credit rating.
•  Loan portfolio: Credit rating agencies favor entities with a higher proportion of secured loans as compared to unsecured loans. Heavy dependence on unsecured loans negatively impacts the credit rating.
•  Market reputation: The market reputation heavily influences the credit rating of the entities. A positive reputation indicates a better loan repayment capability whereas, a negative reputation reduces the credit rating.
•  Prospects of the business: An entity is likely to receive a higher credit rating, if it shows better expansion plans and strong fundamentals for future income. Whereas, if an entity lacks growth in the future may receive a lower credit rating.

How do credit rating agencies work?

• Credit rating agencies give ratings to an organization or an entity based on factors like financial statements, type and level of debt, borrowing and lending history, previous debts, and ability to repay the debt.
• Credit rating provides additional input to the investors allowing them to analyze and make a sound investment decision.
• If the credit rating is poor, it indicates the entity has a high defaulting risk.
• The rating provided by the credit rating agencies serves as a bench market for financial market regulations.