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The first mercantile credit agency was set up in New

York in 1841 to rate the ability of merchants to pay
their financial obligations. Later on, it was taken over
by Robert Dun. This agency published its first rating
guide in 1859.
India was perhaps the first amongst developing
countries to set up a credit rating agency in 1988.
With the increasing market orientation of the Indian
economy, investors value a systematic assessment
of two types of risks, namely business risk arising
out of the open economy and linkages between
money, capital and foreign exchange markets and
payments risk.
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According to S&P Credit ratings
help investors by providing an easily
recognizable, simple tool that
couples a possibly unknown issuer
with an informative and meaningful
symbol of credit quality

According to Moody's A rating is an
opinion on the future ability and
legal obligation of the issuer to make
timely payments of principal and
interest on a specific fixed income
security.











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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.




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Benefit credit rating to
Investors
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Helps in Investment Decision

Choice of Instrument

Saves Investor's Time and
Effort
Benefit credit rating to
company
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Improves Corporate Image

Wider Audience for Borrowing

Helps in Growth and Expansion
Credit Rating Process

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CREDIT RATING AGENCY

1)CREDIT RATING AND INFORMATION
SERVICES OF INDIA LTD.(CRISIL)
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CRISIL was set up in the year 1987.
It was set up in order to rate the firms and then entered
into the field of assessment service for the banks.
The head office of the company is located at Mumbai and
it has established offices outside India also.
CRISIL is a global analytical company providing ratings,
research and risk and policy advisory services.
CRISIL is the largest credit rating agency in India.
CRISILs majority shareholder is STANDARD and
POORs.





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CONT.......
2) 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 and financial services companies as an
independent and professional Investment Information and
Credit Rating Agency.
ICRA's five point IPO Grading Scale
IPO Grade 5 Strong fundamentals
IPO Grade 4 Above-average fundamentals
IPO Grade 3 Average fundamentals
IPO Grade 2 Below-average fundamentals
IPO Grade 1 Poor fundamentals
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3) CARE ((Credit analysis and research limited))

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

4) DCR(Duff & 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.
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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.
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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.