CREDIT RATING AGENCIES

Dr Puja Goyal
HSB, GJUS&T, Hisar
CREDIT RATING AGENCIES
CRA evaluates an individual’s or a
company’s creditworthiness

Credit worthiness
Ability to pay back
Willingness to pay back
CREDIT RATING
Analysis of possible credit risks
associated with granting a financial
instrument
Based on
Debtor’s income and credit lines
Credentials of company- Macro and Micro both
Statement of liabilities and assets
Income statement
Lending and borrowing transactions in the past
Willingness to pay
CREDIT RATING FRAMEWORK
BUSINESS RISK
IndustryRisk
Market position
Operating efficiency
MANAGEMENT RISK
Competence
Risk appetite
Integrity
FINANCIAL RISK
Accounting quality
Financial position
Cash flow
CREDIT RATING AGENCIES
EVALUATES companies, securities,
state governments, non profit
organizations, special purpose entities,
countries
CRA doesn’t provide any decision to
financial institutions
It provides reports and inputs making it
easier to take an informed decision
CRAs IN INDIA
CRISIL
CARE
ICRA
FITCH
IndiaRatings & Research Pvt Ltd
Brickworks Ratings
SMERA
Infometrics
CRAs in INDIA
Regulated by SEBI (Credit Rating
Agencies) Regulations, 1999
RBI, for new Capital Adequacy
Framework, 2017- Bank Loan Ratings
and Basel II for Standardized approach