credit rating agenciesWhen we talk about lending, borrowing, or investing, one common term we often come across is credit rating. In India, several are authorised by SEBI to assess the creditworthiness of borrowers and financial instruments. In this blog, let's understand who these top credit rating agencies are and what their rating scales mean:

What is a credit rating?

credit ratingA is an independent assessment of a borrower's ability to repay a debt on time. It reflects the likelihood of timely repayment of interest and principal. Simply put, a higher credit rating means the borrower is more likely to repay on time, while a lower rating signals a higher risk of default.

Top credit rating agencies in India

top credit rating agenciesHere are the in India and what you should know about them:

CRISIL Limited

Credit Rating Information Services of India Limited is one of the oldest and most trusted rating agencies in the country. Established in 1987, it is now majority-owned by S&P Global.

CRISIL's rating scale

Long-term ratings: CRISIL AAA (highest safety) to CRISIL D (default)
Short-term ratings: CRISIL A1+ (highest safety) to CRISIL D

For example:

CRISIL AAA means the borrower has the highest degree of safety regarding the timely servicing of debt obligations.
CRISIL D indicates that the borrower is currently in default or expected to default soon.

ICRA Limited

Investment Information and Credit Rating Agency was founded in 1991 and is one of the major players in India's credit rating industry. It is an affiliate of Moody's Investors Service, a global rating agency. ICRA rates different financial products, including Corporate Bonds, Bank Loans, structured finance products, and Mutual Funds.

ICRA's rating scale:

Long-term ratings: ICRA AAA to ICRA D
Short-term ratings: ICRA A1+ to ICRA D
The "+" and "–" signs indicate fine differences within the same category (for example, AA+, AA, and AA–).

So, ICRA AAA represents the highest degree of safety, while ICRA D indicates default.

CARE Ratings Limited

Credit Analysis and Research Limited started in 1993 and is another leading Indian CRA. It provides credit ratings, research, valuation, and advisory services.

CARE's rating scale:

Long-term: CARE AAA (highest safety) to CARE D
Short-term: CARE A1+ (highest safety) to CARE D

CARE also uses modifiers such as "+" and "–" for intermediate gradations. For instance, CARE AA+ is slightly better than CARE AA, but below CARE AAA.

Brickwork Ratings India Pvt. Ltd.

Brickwork Ratings was founded in 2007 and is recognised by SEBI and RBI. It provides credit ratings, risk analysis, and research reports.

Brickwork's rating scale:

Long-term: BWR AAA to BWR D
Short-term: BWR A1+ to BWR D

Conclusion

Credit rating agencies in India play an important role in maintaining transparency. Their ratings serve as a guide for lenders, investors, and regulators in assessing the risk associated with a borrower or financial instrument.

Top credit rating agencies in India and their rating scales

A credit rating is an independent assessment of a borrower's ability to repay a debt on time.