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7/27/2019 Creditratingagencycrappt 130306035605 Phpapp02 Copy

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NAME ROLL NO.

HARDIK NATHWANI

SHASHANK PAI 28

SAGAR PANCHAL 29

DHARMIK PATEL 32

KUSH SHAH 39

SIDDARTH TAWDE 461


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The first mercantile credit agency was set up in New Yorkin 1841 to rate the ability of merchants to pay their financialobligations. Later on, it was taken over by Robert Dun. Thisagency published its first rating guide in 1859.

India was perhaps the first amongst developing countriesto set up a credit rating agency in 1988.

With the increasing market orientation of the Indianeconomy, investors value a systematic assessment of two

types of risks, namely business risk arising out of theopen economy and linkages between money, capital andforeign exchange markets and payments risk.

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According to S&P Credit ratings helpinvestors by providing an easilyrecognizable, simple tool that couples

a possibly unknown issuer with aninformative and meaningful symbolof credit quality

According to Moody's A rating is an

opinion on the future ability and legalobligation of the issuer to maketimely payments of principal andinterest on a specific fixed incomesecurity.

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To compare the loan on the basisof quality of credit and loan.

Credit rating agencies also assistto portfolio monitoring

Credit Rating Credit quality oftransparency.

Credit rating of money marketsecurities.

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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 enteredinto the field of assessment service for the banks.

The head office of the company is located at Mumbai and ithas 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 andPOORs.

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CONT.......

2) ICRA: ICRA Limited (formerly Investment Information

and Credit Rating Agency of India Limited) was set up in1991 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 fundamentalsIPO 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 second-

largest 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 thedecades, it evolved into a diversified financial services firm

that provides financial advisory, investment banking, credit

rating and investment management services.12


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CRAs should maintain records of the ratingcommittee.

Information about the historical default rates of theirrating categories.

CRAs should ensure that its analysts do not participatein any kind of marketing and business development.

CRAs while rating structured finance products, arebarred from providing consultancy or advisory servicesregarding the design of the structured financeinstrument.

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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 isused by investors to make an investment decision.

Investors expect higher returns for lower ratedinstruments.

Rating agencies do not comment on the return beingoffered on a security. Also, investors use several other

factors like level of portfolio diversification andliquidity levels of the security etc. in makinginvestment decisions.

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