CREDIT RATING

 INRODUCTION
 DEFINITION
 IMPORTANCE
 TYPES OF CREDIT RATING
 CRDIT RATING PROCESS
 CREDIT RATING AGENCIES IN INDIA
 INRODUCTION

 Credit rating is a grading service to investors

which help them in reducing their risk. It
provides a bird’s eye-view on the credit
quality or the instrument quality of a particular
credit instrument issued by a business house.
 DEFINITION

 According to V.A. Avadhani, “Credit rating is

essentially giving an expert opinion by a rating
agency on the relative willingness and ability
of the issuer of a debt instrument to meet the
debt instrument to meet the debt servicing
obligation in time and in full.”
 IMPORTANCE
 The credit rating reflects the issuer’s strengths,
weaknesses, soundness of project, quality
management and composite performance, through the
whole organization is not graded.
 Credit rating become significant when many default
prone companies are entering the capital market.
 Rating are very useful to investors especially when
the regulatory authority takes no responsibility for
those who raise funds and investors are left to defend
themselves.
 TYPES OF CREDIT RATING
 Bond Rating
 Equity Rating
 Commercial paper Rating
 Borrowers Rating
 CREDIT RATING PROCESS

 The rating process begins at the request of the company.

 A team is formed with professionally qualified analysts who
are well-versed with the working of the particular industry in
which the requesting company operates. That team visits the
company and make inspections of the operations first hand.
 The team conduct meeting.
 The team consults with a back-up team.
 The team forwards its report to the internal committee.
 Open discussion
 Forwarding Rating to external committee
 Communication
 CREDIT RATING AGENCIES IN
INDIA
Credit Rating Information Services of India Ltd.
CRISIL was incorporated in 1987 . It was set up in
Jan. 1988 jointly by the ICICI, UTI, LIC,GIC.

Investment Information and Credit Rating Agency of

India Ltd. It was incorporated on Jan. 16, 1991 and
launched its service on August 31, 1991.
 CARE
 Credit Analysis and Research Ltd. Was
incorporated in April 1993 . It was promoted
by IDBI, UTI, Canara bank, and other leading
banks
 Case
 UBI