Credit Rating Agencies in India: Complete List Here

What is a Credit rating Agency?

It is a company which rates the the ability of various financial institutions to pay back their loans with timely principal and interest installments.

What is Credit Rating?

• A credit rating is an assessment of the creditworthiness(ability to pay) of a borrower in general terms or with respect to a particular debt or financial obligation.
• A credit rating can be assigned to any entity that seeks to borrow money — an individual, corporation(banks, nbfcs etc), state or provincial authority, or sovereign government

History of Credit Rating Agency in the world:

The history of modern day Credit Rating Agencies (CRA) can be traced back to Mercantile Rating Agencies in the early 19th century, which used to rate merchants’ ability to pay off their debts in the United States. However, the history of CRAs in India is relatively short and it started with formation of Credit Rating Information Services of India Limited (CRISIL) in 1987. Subsequently, Investment Information and Credit Rating Agency of India Limited (ICRA), Credit Analysis and Research Limited (CARE Ratings), India Ratings and Research Pvt. Ltd. (previously Fitch India), SME Rating Agency Limited (SMERA), Brickwork Ratings India Private Limited, Onicra Credit Rating Agency of India Ltd, Micro Credit Ratings International Limited (MCRIL) etc. started their operations in India.

Which Credit rating agency was the first credit rating agency of India?

Credit Rating Information Services of India Limited (CRISIL) in 1987.

What is the use of Credit Rating Agency in India?

Till 2007, domain of these rating agencies was restricted to rating corporate bonds and niche areas like assessment of small scale industries, small and medium enterprises, individual credit, etc.But after the introduction of Basel-II Norms, Banks in India were required to comply with Standardised Approach (SA) of computation of capital for credit risk as specified in Basel framework either by March 2008 or March 2009 depending on the international presence.

Under the Basel framework, two broad methodologies are available for banks to measure their credit risk capital charge for regulatory purposes, viz., Standardised Approach (SA) and Internal Rating Based (IRB) Approach, based on preparedness of the banks in areas of credit risk measurement and management.

Which CRA were accredited by RBI under Basel framework?

Four domestic CRAs viz. CARE, FITCH India (now changed to India Ratings), CRISIL and ICRA were found to be eligible to be accredited under Basel framework

Subsequently, two more domestic CRAs viz., Brickwork and SMERA ( now named as Acuite) were granted accreditation in April and September of 2012, respectively. In effect, RBI has so far accredited six domestic CRAs and banks are required to use the ratings assigned by any of these CRAs to RW their exposures under the SA for credit risk capital computation.

Under which regulatory body Credit Rating Agencies are registered?

SEBI

Why SEBI is regulating CRA?

CRA also rates the securities that is the share market of India. Hence CRA are regulated by SEBI.

How many CRA have been registered till now in India?

7, Remember only 6 are accrediated by RBI for under the SA for credit risk capital computation. Infomerics Valuation and rating Private Limited is a CRA but not accredited by RBI.

Credit Rating Agency Names:

1. CARE,
2. FITCH India (now changed to India Ratings),
3. CRISIL
4. ICRA
5. Brickwork
6. SMERA ( now named as Acuite)
7. Infomerics Valuation and rating Private Limited

Recent in news:

• SEBI has cancelled the the license of Brickwork  Rating for repeated lapses and irregularities in discharging its duties. So exact status for Brickwork Rating is still unknown.
• Brickwork Ratings founded by bankers, credit rating professionals, former regulators as well as professors, is committed to promoting Financial Literacy. Brickwork Ratings has Canara Bank, a leading Public Sector Bank, as its promoter and strategic partner
• BWR has its corporate office in Bengaluru
• Vivek Kulkarni, IAS (Retd.) Founder & MD.

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