Top Credit Rating Agencies in India: A Brief Summary

The term credit rating refers to the credit repayment capability of any entity. Some of our  country’s major credit rating firms include CRISIL, CARE, ICRA and India Ratings and Research Pvt. Ltd. Here, we will speak about the top credit rating agencies in India. 

What Does Credit Rating Mean? 

Credit rating involves  evaluation of an organisation’s creditworthiness by primarily assessing its financials. It represents the possible risks of credit defaults in rating any form of credit to a company or an individual. It is represented by alphabetical symbols and helps financial institutions decide whether or not the borrower will be able to repay the credit.  

What Are Credit Rating Agencies? 

A CRA or credit rating agency is a firm that analyses and evaluates the creditworthiness of a company or an individual. These firms take the borrower’s credit lines, financials, business model  and other such factors into consideration. Based on these, they decide whether the borrower will be able to repay the debts on time and the risks associated. 

The Securities and Exchange Board of India (SEBI), holds the right to control and authorise the credit rating agencies under the SEBI (Credit Rating Agencies) Regulations, 1999 of the SEBI Act, 1992.

How Do Credit Rating Agencies Work? 

After a thorough analysis, credit rating agencies give ratings to organisations, individuals, or other entities. These organisations can  evaluate corporates, state governments, non-profit organisations, nations, securities, local governmental entities, and enterprises created for a specific purpose. When determining a rating, several  variables are considered , including financial statements, the type of debt, borrowing and lending history, payback capacity, previous credit repayment track record, and more. Each of these elements plays a specific role in determining the  outcome, the credit rating. The credit rating agency doesn’t advise financial institutions whether or not a particular firm needs a credit facility; instead, it gives the report and other information that makes it easier for the lender to analyse and make a well-informed choice accordingly. 

Which Are the Leading  Credit Rating Agencies in India? 

Here are the best credit rating agencies in India that measure the creditworthiness of organisation’s  across the country: 

• CRISIL (Credit Rating Information Services of India Limited)

Launched in  1987, CRISIL is the oldest credit rating firm in India. This company has its headquarters in Mumbai and  acquired 8.9% of CARE’s stake in  2017.

While CRISIL specialises in companies as per their creditworthiness, some of the other services offered by the company include coalition index, unit-linked insurance plans, and mutual funds ratings, etc. CRISIL’s clientele includes some of the country’s prominent banks and NBFCs such as IndusInd Bank, UCO Bank, Bajaj Finance, etc.

• ICRA (Investment Information and Credit Rating Agency) Limited 

Founded in the year 1991 in Gurugram, ICRA Limited is one of our country’s  leading credit rating agencies. It has four subsidiaries: ICRA Lanka, ICRA Nepal, ICRA Analytics Ltd.  ICRA’s parent entity, Moody’s Investor Service is a leading global risk assessment firm. Apart from credit rating, some of the other services offered by ICRA include assessment of paying ability of insurance companies, project finance rating, credit risk assessment of debt mutual fund, etc. ICRA has a diverse clientele spread across the sectors. Some of ICRA’s key clients in the financial sector include Allahabad Bank, Aditya Birla Capital Limited, Bharti AXA General Insurance and more. 

• CARE (Credit Analysis and Research Limited)

Launched in  1993, CARE is one of the most renowned firms offering credit rating services to state and provincial governments and large organisations. With its headquarters in Mumbai, CARE provides  long-term and short-term debt instruments and bank loan ratings. Further, CARE has partnered with several companies from Brazil, Portugal, South Africa and Malaysia to launch an international credit rating firm known as ‘ARC Ratings’. CARE serves some of India’s largest banks including HDFC Bank, ICICI Bank, Axis Bank, Bank of Baroda, etc. 

• India Ratings and Research Pvt. Ltd. 

This credit rating agency is a subsidiary of the Fitch group and a reputed firm that provides credit evaluations to several worthy  organisations, financial institutions, insurance companies, corporate borrowers and banks. Further, this firm is authorised by the National Housing Bank and the Reserve Bank of India.

• Acuite Ratings and Research Limited

Acuite Rating Agency is a leading provider of credit ratings and analysis for companies and financial institutions. Acute’s ratings are widely recognized and respected by investors, analysts, and other market participants, and are used to inform investment decisions, assess risk, and measure creditworthiness. Acuite’s clientele in the financial sector include Bank of India, Unity Small Finance Bank, Bank of Maharashtra, Jupiter Capital, etc. 

Credit Ratings Offered by the Top Firms in India

The table below shows the credit rating scales that rating agencies use in India: 

Credit Rating Scale	ICRA	CRISIL	CARE	India Rating and Research
Highest Safety	ICRA AAA	CRISIL AAA	CARE AAA	IND AAA
High Safety	ICRA AA	CRISIL AA	CARE AA	IND AA
Low risk	ICRA A	CRISIL A	CARE A	IND A
Moderate credit risk	ICRA BBB	CRISIL BBB	CARE BBB	IND BBB
Moderate default risk	ICRA BB	CRISIL BB	CARE BB	IND BB
High default risk	ICRA B	CRISIL B	CARE B	IND B
Very high risk	ICRA C	CRISIL C	CARE C	IND C
Defaulted	ICRA D	CRISIL D	CARE D	IND D

Final Thoughts 

A credit rating is a determination of an entity’s creditworthiness for purposes of borrowing money. This includes businesses, non-profit organisations, local governments, or other governments. Verified credit rating companies evaluate the company’s financial history and its capacity to pay back debts in order to issue these ratings. 

It is crucial to have a strong credit rating since it is used by lenders and investors to determine whether or not to grant loans. A good credit rating can also help a company obtain money at lower interest rates. Here, we have given a brief of  some of India’s  top credit rating agencies. Further, these agencies also  assist  lenders and investors to analyse  and make  informed decisions. 

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