CREDIT RATING AGENCIES

HISTORY
First credit rating agency. India was perhaps the first amongst developing countries to set up a credit rating agency in 1988. Risks.

WHAT IS CREDIT RATING?

DEFINITON
According to S&P According to MOODYS

IMPORTANCE OF CREDIT RATING

To compare the loan on the basis of quality of credit and loan. Credit rating agencies also assist to portfolio monitoring. Credit Rating Credit quality of transparency. Credit rating of money market securities.

BENEFITS OF CREDIT RATING

TO INVESTORS

TO COMPANY

FUNCTIONS OF CRA
PROVIDES EXAMINES

OFFER SERVICES

GRADATION

CREDIT RATING PROCESS

CREDIT RATING AGENCIES IN INDIA CRISIL ICRA

CARE

DCR

CRISIL
The first credit agency setup on January 1, 1988, jointly started by ICICI and UTI with an equity capital of Rs. 4 crores, as public Ltd company. CRISIL is India's leading rating agency, and is the fourth largest in the world. With over a 60% share of the Indian Ratings market, CRISIL Ratings is the agency of choice for issuers and investors. CRISIL inspires trust and confidence the world over. It redefines industry standards constantly, and sets new benchmarks year after year.

CRISIL(Core Business)
Rating Research Capital markets Infrastructure Advisory CRISIL risk solutions

ICRA
ICRA Limited (formerly Investment Information and Credit Rating Agency of India Limited) was set up in 1991 by leading financial/investment institutions, commercial banks. ICRA was set up by IFCI on 16th January 1991. It is a public limited company with an authorized share capital of Rs.10 crores, Rs. 5 crores is paid up. ICRA is a Public Limited Company, with its shares listed on the Bombay Stock Exchange and the National Stock Exchange.

RANGE OF SERVICES
Rating Services Grading Services Consulting Services

CARE
CARE(credit analysis and research limited). CARE Ratings commenced operations in April 1993 and over nearly two decades, it has established itself as the secondlargest credit rating agency in India. With the rating volume of debt of around Rs.33,062 bn (as on June 30, 2011).

RATING METHODOLOGY
Business analysis Financial analysis Management evaluation Fundamental analysis

RATING SYMBOLS


High investment grades AAA & AA - Highest safety A - Adequate safety BBB - moderate safety Speculative grades BB - inadequate safety B - high risk C - substantial risk D - default

DCR
DCR(Duff and Phelps credit rating India limited). It was founded in 1932 to provide high quality investment research services focused on the utility industry. Over the decades, it evolved into a diversified financial services firm that provides financial advisory, investment banking, credit rating and investment management services.

SEBI ISSUED GUIDELINES TO CRAs

CRAs should maintain records of the rating committee. Information about the historical default rates of their rating categories. CRAs should ensure that its analysts do not participate in any kind of marketing and business development. CRAs while rating structured finance products, are barred from providing consultancy or advisory services regarding the design of the structured finance instrument.

CONCLUSION
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 is used by investors to make an investment decision. Investors expect higher returns for lower rated instruments. Rating agencies do not comment on the return being offered on a security. Also, investors use several other factors like level of portfolio diversification and liquidity levels of the security etc. in making investment decisions.

PRESENTED BY: MOHIT SHAH 45 VAIBHAV MEHTA 38 VISHAL JAIN 24 POOJA GOKANI 12 ARZOO SHAH 41 SEJAL ZAVERI 58

Thank you