Indias Credit Rating Agencies

Dr. R. Vara Prasad

CRISIL Limited

Type Public company

Traded as BSE: CRISIL
NSE: CRISIL
[1]
Founded 1987
Headquarters Mumbai, Maharashtra,
India
Services Ratings, research, risk
and policy advisory

Revenue 11,106
million(US$170 million)
[2]
(December 2013)

Operating income 3,199.5

million(US$50 million) (
[2]
December 2013)

Profit 2,978.2
million(US$46 million) (
[2]
December 2013)

Website www.crisil.com
1987 - The Credit Rating Information Services of India Limited (CRISIL), was
incorporated on January 29, as a Public Limited Company, was promoted by
leading financial institutions, and a host of nationalized Banks, foreign Banks and
private sector Banks, with the main promoters being The Industrial Credit and
Investment Corporation of India Limited (ICICI), Unit Trust of India (UTI) and
Housing Development Finance Corporation Limited (HDFC). The Company, which
obtained the Certificate of Commencement of Business on 3rd March.
CRISIL
CRISIL is acronym for Credit Rating Information Services of India Limited. CRISIL
is India's leading Ratings, Financial News, Risk and Policy Advisory company. Since
1987 when CRISIL was incorporated, CRISIL has played an integral role in India's
development milestones. CRISIL's majority shareholder is Standard & Poor's, the
world's foremost provider of independent credit ratings, indices, risk evaluation,
investment research and data. CRISIL's association with Standard & Poor's, a division
of The McGraw-Hill Companies, dates back to 1996 when both companies started
working together on rating methodologies and joint projects. CRISIL Ratings is the
only ratings agency in India to operate on the basis of sectoral specialisation. CRISIL
Ratings plays a leading role in the development of the debt markets in India. CRISIL
has also spearheaded the formation of the CariCRIS, the world's first regional credit
rating agency.
The main functions of CRISIL
1. Ratings
It is the only ratings agency in India with sectoral specialization It
has played a critical role in the development of the debt markets in
India. The agency has developed new ratings methodologies for debt
instruments and innovative structures across sectors. CRISIL
Ratings provides technical know-howto clients all over the world and
has helped set up ratings agencies in Malaysia(RAM), Israel
(MAALOT) and in the Caribbean.
2. Research
It provides research, analysis and forecasts on the Indian economy, industries and
companies to over 500 Indian and international clients across financial, corporate,
consulting and public sectors. CRISIL Fund Services: It provides fund evaluation
services and risk solutions to the mutual fund industry. The Centre for Economic
Research: It applies economic principles to live business applications and provide
benchmarks and analyses for India's policy and business decision makers. Investment
Research Outsourcing: CRISIL added equity research to its wide bouquet of services,
by acquiring Irevna, a leading global equity research and analytics company. Irevna
offers investment research services to the world's leading investment banks and
financial institutions
3. Advisory

It provides policy, regulatory and transaction level advice to governments

and leading organisations across sectors. Investment and Risk Management
Services: CRISIL Risk Solutions offers integrate d risk management solutions
and advice to Banks and Corporates by leveraging the experience and skills of
CRISIL in the areas of credit and market risk.
Modus Operandi of CRISIL
When a company applies for credit rating, CRISIL adopts certain procedure. It
applies the SWOT Analysis, taking into account the Strength, Weakness, Opportunity
and Threat in prospect for the company.
In order to study these aspects, there are different types of staff employed by
CRISIL. There are two teams which undertake the study of the companys future
prospects. The first team will assess the companys rating on the basis of the
benchmark of the industry.
A bench-mark company in an industry is one which denotes the standard company of
the industry. Companies above the benchmark are considered to be performing very
well. While companies below the benchmark are considered good.
The second team will also take into account the condition of the industry. Both these
teams will interact with each other through internal committees. The internal
committee will have senior analysts and they undertake an in-depth analysis of the
data provided. Finally, the recommendations are referred to the rating committee
which consist of six directors of the company.
The members of the rating committee will have no connection with the industry or
investment agencies. So, an impartial opinion will be formed while finalizing the credit
rating. This is kept confidential. Thus, the credit rating system of CRISIL is
considered to be a multi-layered process.
Performance of CRISIL
Among the credit rating companies, CRISIL has the enviable position of rating
maximum number of credit instruments, which is around 380 instruments
touching around Rs. 34,500 crores. By 1995; it has doubled the value of
instruments covered.
To assist the investors, CRISIL has come out with a Bond Yield Table which will
give a fair idea on various debentures.
Publications of CRISIL
CRISIL Ratings Scan is a quarterly publication which gives details on the rating
reports of instruments of various companies. CRISIL Card is a service provided
by CRISIL which gives details about companies performance from various
angles. It is a cull-out of information from the balance sheet of the companies in
the past 4 years.
ICRA (Investment information and Credit Rating Agency of lndia) 1991

ICRA was the second rating agency established in the year 1991. It
is a public limited company and it has its head office in New Delhi.
Moodys is the majority shareholder of ICRA. The long term rating
of ICRA is exactly similar to CRISIL shown in the chart above
ICRA
ICRA was established in 1991 by leading financial or investment institutions,
commercial banks and financial services companies. It was formerly known as
Investment Information and Credit Rating Agency of India. The Public Limited
Company has its shares listed on the Bombay Stock Exchange (BSE) and the National
Stock Exchange (NSE).
The international Credit Rating Agency Moodys Investors Service is ICRAs largest
shareholder. The participation of Moodys is supported by a Technical Services
Agreement, which entails Moodys providing certain highvalue technical services to
ICRA.
The agreement is aimed at benefiting ICRAs inhouse research capabilities, and
providing it with access to Moodys global research base. Today, ICRA and its
subsidiaries together form the ICRA Group of Companies (Group ICRA).
ICRA provides information and guidance to institutional and individual
investors/creditors, enhances the ability of borrowers/issuers to access the money
market and the capital market for tapping a larger volume of resources from a wider
range of the investing public, assists regulators in promoting transparency in the
financial markets and provides intermediaries with a tool to improve efficiency in the
funds raising process.
The company has dedicated teams for Monetary, Fiscal, Industry and Sector research,
and a panel of advisors to enhance its inhouse capabilities. Its research base enables
the company to maintain highest standards of quality and credibility.
ICRA - Range of Services
a) Rating Services
As an early entrant in the Credit Rating business, ICRA is one of the most
experienced Credit Rating Agencies in the country today. ICRA rates rupee
denominated debt instruments issued by manufacturing companies,
commercial banks, nonbanking finance companies, financial institutions,
public sector undertakings and municipalities, among others.
It also rates structured obligations and sectorspecific debt obligations such as
instruments issued by Power, Telecom and Infrastructure companies. The other
services offered include Corporate Governance Rating, Stakeholder Value and
Governance Rating, Credit Risk Rating of Debt Mutual Funds, Rating of
Claims Paying Ability of Insurance Companies, Project Finance Rating, and
Line of Credit Rating. ICRA, along with National Small Industries
Corporation (NSIC), had launched a Performance and Credit Rating Scheme
for Small Scale Enterprises in India aimed at enabling Small and Medium
Enterprises (SMEs) improve their access to institutional credit, increase their
competitiveness, and raise their market standing.
b) Grading Services
The Grading Services offered by ICRA employ pioneering concepts and
methodologies, and include grading of: Construction Entities; Real
Estate Developers and Projects; Healthcare Entities; Maritime Training
Institutes; and Initial Public Offers (IPOs).
The Grading of Construction Entities seeks to provide an independent
opinion on the quality of performance of the entities graded. Similarly,
the grading of real estate developers and projects seeks to make property
buyers aware of the risks associated with real estate projects and with
the developers ability to deliver in accordance with the terms agreed.
ICRAs Healthcare Gradings present an independent opinion on the
quality of care provided by healthcare entities. In the education sector,
ICRA offers the innovative service of Grading of Maritime Training
Institutes in India. In IPO Grading, an ICRAassigned IPO Grade
represents a relative assessment of the fundamentals of the issue
Graded in relation to the universe of other listed equity securities in
India.
c) Information Services
The Information Services Division focuses on providing authentic
data and valueadded products used by intermediaries, financial
institutions, banks, asset managers, institutional and individual
investors, and others. The division's portfolio of products includes
sector/industryspecific studies/publications and mandatebased
studies (customized research).
ICRAs Group Companies:
ICRA Management Consulting Services Limited (IMaCS) A multiline consulting firm with a
global operating footprint. IMaCS offers consulting services in Strategy, Risk Management,
Regulatory Economics, Transaction Advisory, and Process Reengineering.

ICRA Techno Analytics (ICTEAS) A subsidiary of ICRA offering a complete portfolio of

Information Technology (IT) solutions to meet the dynamic needs of presentday businesses. The
services range from the traditional development of clientserver, webcentric and mobile
applications to the generation of cuttingedge business analytics. An indepth knowledge of various
technology areas, coupled with its strengths in various verticals, enables ICTEAS provide endto
end services of excellent quality. ICTEAS uses a mix of onsite or offshore strategies to optimize
bottomline benefits for its customers. ICTEAS has two subsidiaries ICRA Techno Analytics and
Axiom Technologies.

ICRA Online (Online A leading information services, outsourcing solutions and technology
solutions provider. Caters for some of the biggest names in the financial services sector in India and
abroad, which is a testimony to its product quality, commitment and credibility. It has two Strategic
Business Units (SBUs) The Information Services and Technology Solutions Division (MFI
Division), and Knowledge Process Outsourcing Division (KPO Division).
 CARE (Credit Analysis and Research Ltd 1993)
Then in the year 1993, the next credit rating agency which came up
was CARE. It has its head office in Mumbai and it is Indias second
largest credit rating agency.
It is one of the five partners of international rating agency called
ARC Ratings.