Process of credit Rating and Credit rating agencies in India
Credit Rating Agencies :
The Credit Rating Agencies (CRA) is one of the capital market intermediaries. It is a body corporate, which is engaged in the business of rating of securities according to company performance and offered by way of public issue or right issue.
Credit Rating Agencies in India
Following are the important CRA in India:
I.Credit Analysis and Research Limited (CARE)
II. Investment Information and Credit Rating Agency of India Limited (ICRA)
III. Credit Rating and Information Services (India) Limited (CRISIL)
IV. FITCH Credit Ratings India Private Limited
V. Standard and Poor’s Corporation.
Uses of Credit Rating
Credit rating is useful to the following:
Investors: It helps investors to invest on high ranked company who having less risk and build confidence among investors.
Issuers: This enables the issuers of high rated instruments to access the market even during adverse conditions.
Intermediaries: Credit Rating also helps intermediaries like merchant bankers, brokers, etc. Credit Rating helps merchant bankers in pricing and maintain of lower risk.
Regulators: In India, the main regulator related to securities market is SEBI and one of the important functions of SEBI is to protect the interest of investors in securities market.
Promoters of a CRA
A CRA can be promoted only by any of the following:
– A public financial institution ;
– Scheduled commercial bank;
– A foreign bank;
– A foreign credit rating agency having minimum 5 years of experience;
– A body corporate having net worth of ₹100 crores in each of the immediately preceding 5 years.
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