A credit rating evaluates the credit worthiness of an issuer of specific types of debt, specifically, debt issued by a business enterprise

such as a corporation or a government. It is an evaluation made by credit rating agency of the debt issuers likelihood of default.[1] Credit ratings are determined by credit ratings agencies. The credit rating represents the credit rating agency's evaluation of qualitative and quantitative information for a company or government; including non-public information obtained by the credit rating agencies analysts. Credit ratings are not based on mathematical formulas. Instead, credit rating agencies use their judgment and experience in determining what public and private information should be considered in giving a rating to a particular company or government. The credit rating is used by individuals and entities that purchase the bonds issued by companies and governments to determine the likelihood that the government will pay its bond obligations. Credit ratings are often confused with credit scores. Credit scores are the output of mathematical algorithms that assign numerical values to information in an individual's credit report. The credit report contains information regarding the financial history and current assets and liabilities of an individual. A bank or credit card company will use the credit score to estimate the probability that the individual will pay back loan or will pay back charges on a credit card. However, in recent years, credit scores have also been used to adjust insurance premiums, determine employment eligibility, as a factor considered in obtaining security clearances and establish the amount of a utility or leasing deposit. A poor credit rating indicates a credit rating agency's opinion that the company or government has a high risk of defaulting, based on the agency's analysis of the entity's history and analysis of long term economic prospects. A poor credit score indicates that in the past, other individuals with similar credit reports defaulted on loans at a high rate. The credit score does not take into account future prospects or changed circumstances. For example, if an individual received a credit score of 400 on Monday because he had a history of defaults, and then won the lottery on Tuesday, his credit score would remain 400 on Tuesday because his credit report does not take into account his improved future prospects.

Overview Credit Analysis & Research Ltd. (CARE Ratings) is a full service rating company that offers a wide range of rating and grading services across sectors. CARE has an unparallel depth of expertise. CARE Ratings methodologies are in line with the best international practices. CARE Ratings has completed over 8488 rating assignments having aggregate value of about Rs.26609 billion (as at Sep 2010), since its inception in April 1993. CARE is recognised by Securities and Exchange Board of India (Sebi), Government of India (GoI) and Reserve Bank of India (RBI) etc.

CARE was promoted by major Banks/FIs (financial institutions) in India. The three largest shareholders of CARE are IDBI Bank, Canara Bank and State Bank of India. CARE, is set-up with two divisions:

CARE Ratings: The ratings division of CARE has over a decade long experience in rating debt instruments/Enterprise ratings covering the full spectrum of Universe comprising:
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Industrial Companies Service companies Infrastructure companies Banks Financial Institutions (FIs) Non-Bank Finance companies(NBFCs) Public Sector Undertakings (PSUs) State Government Undertakings Municipal Corporations Structured Finance Transactions Securitization Transactions SMEs SSI Micro Finance Institutions

In addition to debt ratings CARE Ratings has experience in providing the following specialized grading/rating services:
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Corporate Governance ratings IPO grading Mutual Fund Credit quality Ratings Insurance Claims Paying Ability Ratings Issuer Ratings Grading of Construction entities Grading of Maritime training institutes LPG/SKO Ratings

CARE Ratings is well equipped to rate all types of debt instruments like Commercial Paper, Fixed Deposit, Bonds, Debentures, Hybrid instruments, Structured Obligations, Preference Shares, Loans, Asset Backed Securities(ABS), Residential Mortgage Backed securities(RMBS) etc. CARE Ratings has been recognized by statutory authorities and other agencies in India for rating services. The authorities/agencies include: Securities and Exchange Board of India (Sebi), Reserve Bank of India (RBI), Director General, Shipping and Ministry of Petroleum and Natural Gas (MoPNG), Government of India (GoI), National Housing Bank (NHB), National Bank for Agriculture and Rural development (NABARD), National Small Scale Industries Commission (NSIC). CARE Ratings has also been recognized by RBI as an Eligible Credit Rating Agency (ECRA) for Basel II implementation in India.

CARE Ratings has significant presence in all sectors including Banks / FIs, Corporate, Public finance. Coverage of CARE Ratings has extended to more than 2811 entities over the past decade and is widely accepted by investors, issuers and other market participants. CARE Ratings have evolved into a valuable tool for credit risk assessment for institutional and other investors, and over the years CARE has increasingly become a preferred rating agency. CAREs Credit Rating is an opinion on the relative ability and willingness of an issuer to make timely payments on specific debt or related obligations over the life of the instrument. CARE rates rupee denominated debt of Indian companies and Indian subsidiaries of multinational companies. CARE ratings are not recommendations to buy/sell or hold any security. CARE Research : The Research and Information division of CARE provides contemporary research and information covering various industries and financial markets. Publications include Industry Research Reports with Updates, Debt Market Review, Budget Analysis, other policy impact analysis, and special commentaries on topical issues. CARE Research offers both subscription based reports and also customised reports on request. The division has an established network of primary and secondary sources, which enable the analyst to form unbiased opinion on the industry segments. It has also developed different methodologies for forecasting the future demand-supply situation in a particular industry.

ICRA Limited (formerly Investment Information and Credit Rating Agency of India Limited) was set up in 1991 by leading financial/investment institutions, commercial banks and financial services companies as an independent and professional Investment Information and Credit Rating Agency. Today, ICRA and its subsidiaries together form the ICRA Group of Companies (Group ICRA). ICRA is a Public Limited Company, with its shares listed on the Bombay Stock Exchange and the National Stock Exchange. Alliance with Moodys Investors Service The international Credit Rating Agency Moodys Investors Service1 is ICRAs largest

shareholder. The participation of Moodys is supported by a Technical Services Agreement, which entails Moodys providing certain high-value technical services to ICRA. Specifically, the agreement is aimed at benefiting ICRAs in-house research capabilities, and providing it with access to Moodys global research base. The agreement also envisages Moodys conducting regular training and business seminars for ICRA analysts on various subjects to help them better understand and manage concepts and issues relating to the development of the capital markets in India. Besides this formal training programme, the agreement provides for Moodys advising ICRA on Rating-products strategy, and the Ratings business in general. conclusion Credit ratings are opinions about relative credit risk. Credit ratings are not investment advice, or buy, hold, or sell recommendations. They are just one factor investors may consider in making investment decisions. Credit ratings are not indications of the market liquidity of a debt security or its price in the secondary market. Credit ratings are not guarantees of credit quality or of future credit risk.