What is Credit Rating Agency (CRA)? Top CRAs in India

Credit Rating AgencyCredit Rating Agency (CRA) is an entity which assesses the ability and willingness of the issuer company for timely payment of interest and principal on a debt instrument. It measures the financial strength of companies. The rating is intended to get fair idea of risk associated while providing credit to a company. Higher is the credit rating, lower is the risk associated with the investment.

A CRA assigns credit rating to the entities like companies, NGO, state governments, countries, securities, local government bodies etc. The investor can take sound investment decisions based on the analysis of these ratings.

What are big three Credit Rating Agencies?

The three prominent credit rating agencies are:

  • Standard and Poor’s (S&P): The S&P global rating agency has been in business of rating for more than 150 years. It has presence in 28 countries and has done 1 million credit ratings so far.
  • Moody’s Investor Service: It provides credit rating and research covering debt instruments and securities.
  • Fitch Group

These three have global market share of 95%.

Indian Credit Rating Agency

In India CRA are regulated by SEBI. The leading credit rating agencies in India are:

  • CRISIL (Credit Rating Information Services of India Ltd)
    CRISIL is first rating agency set up in India in 1987 with headquarters at Mumbai. It is India’s foremost provider of ratings, data, research, analytics and solutions. S&P Global India is majority stakeholder in CRISIL.
  • ICRA (Investment Information and Credit Rating Agency)
    ICRA is a joint venture of Moody’s and Indian financial & banking organisations. It was set up in 1991 with headquarters at Gurugram, Haryana.  Its major focus is MSME.
  • CARE (Credit Analysis and Research Limited)
    CARE commenced its operations in 1993 with headquarters in Mumbai.  It is second largest credit rating agency in India. It is promoted by IDBI, UTI, Canara Bank and some other Financial Institutions (FI). It has regional offices in Ahmedabad, Bengaluru, Chandigarh, Chennai, Coimbatore, Hyderabad, Jaipur, Kolkata, New Delhi and Pune.
  • Brickwork Ratings
  • India Ratings and Research Pvt Ltd
  • Fitch India
  • SMERA (SME Rating Agency of India)
    SMERA is founded in 2005 especially for MSME sector. It is founded by SIDBI, Dun & Bradstreet Information Services India Pvt Ltd, various public and private sector banks. Its headquarters are situated at Mumbai

How is credit rating works?

Rating is based on comprehensive evaluation on strength & weaknesses of company fundamentals. It includes financial analysis, in-depth study of industry, macroeconomic regulator and political environment. Ratings are generally denoted by symbols like AA+, A+, B-, BB- etc.

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