CREDIT RATING

MEANING OF CREDIT RATING

Moodys`:- “rating are designed exclusively for the purpose of grading bound according to their investment qualities”

CRISIL:-“credit rating is an unbiased and independent opinion as to issuer’s capacity to meet its financial obligation. It does not constitute a recommendation to buy/sell or hold a particular security.”

ICRA: - “Rating are opinions on the relative capability of timely servicing of corporate debt and obligations .there are not recommendations to buy or sell nether the accuracy the completeness of the information is guaranteed.”

FUNCTIONS OF CREDIT RATING

1.     Superior Information

Rating by an independent and professional firm offers a superior and more reliable source of information.

2.     Low-Cost Information

A rating firm that gathers, analyzes, interprets and summaries complex information in a simple and readily understood format for wide public consumption represents a cost-effective arrangement.

3.     Basis For A Proper Risk-Return Trade-Off

If debt securities are rated professionally and if such a rating enjoys widespread investor acceptance and confidence, a more rational risk-return trade-off would be established in the capital market.

4.      Healthy Discipline On Corporate Borrowers   

Public exposure has a healthy influence over the management of the issuer because of its desire to have a clear image.

5.     Formulation Of Public Guidelines On Institution Investment

The public policy on the kind of security that is eligible for inclusion in different kind of institution portfolios can be developed with great confidence if securities are rated professionally by independent agencies.

BENEFITS OF CREDIT RATING

1.     Low-cost infarction

2.     Quick investment decision

3.     Independent investment decision

4.     Investors protection

BENEFITS OD RATING COMPANIES

1.     Sources Of Additional Certifications

2.     Increase The Investor Population

3.     Forewarns Risk

4.     Encourages Financial Discipline

5.     Merchant Bank Hob Made Easy

6.     Foreign Collaboration Made Easy

7.     Benefit The Industry As A Whole

8.     Low Cost Of Borrowing

9.     Rating As A Market Tool

CREDIT RATING AGENCIES IN INDIA

1.     Credit Rating Information Service Ltd. (CRIST)

2.     Investment Information And Credit Rating Agency Of India (ICRA)

3.     Credit Analysis And Research (CARE)

4.     Duff Phelps Credit Rating Pvt. Ltd. (DCR India)

5.     Onida Individual Credit Rating Agency Ltd (ONICRA)