Credit Rating Agencies in India

Credit rating agencies are focused on the credit scores of organizations and their eligibility to apply for loans. There are eight top credit rating agencies in India and they are concerned with the borrowing health of different entities, just to ascertain its loan eligibility remains intact as a borrower and the entity remains creditworthy to all lenders. 

About Credit Rating Agencies

CRA or Credit Rating Agencies mainly focus on measuring the credit ratings of organisations and companies. They specifically report whether or not your company has an ideal credit score to apply for loans and credit cards. These agencies do not provide credit reports to individuals. This is the significant difference between credit scores and credit ratings.

These agencies are beneficial for providing you with an accurate credit rating to know precisely if you have an ideal credit range at the moment. You can also analyse whether or not you need to improve your credit rating before applying for loans.

These agencies also analyse your credit risk based on your past repayment records. These agencies mainly generate credit scores for big companies, organisations, NGOs, local and state governments, and other big entities. SEBI regulated all the credit rating agencies in India in 1999, as per the Securities and Exchange Board of India Act.

India has eight agencies for measuring credit ratings- Brickwork Rating, ICRA, CRISIL, India Rating and Research Pvt. Ltd CARE, SMREA, Infomerics Valuation, Onida Individual Credit Rating Agency of India(ONICRA), and Rating Private Limited.

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What is a Credit Rating Agency?

A credit rating agency aims at measuring your company's creditworthiness. They give you a credit report which is based on your company's past repayment history. Your credit report or credit rating is a three-digit number that determines whether or not you are eligible to apply for loans and credit cards.

Your organisational credit rating depends on your past repayment behaviour, borrowing history, repayment responsibility and other details. These are examined by your lender when you apply for a loan. Therefore, credit rating plays a huge role in determining whether you will get a loan or not.

Credit rating agencies play a vital role in determining your worthiness as a borrower. Your credit rate is examined by your potential lender when you apply for a loan. It consists of your past borrowed amounts, the way you repaid them and other details.

Credit rating in India roughly depends on your ability to be a responsible borrower. These agencies mostly use a range of factors and metrics to prepare your credit report based on your personal and financial history.

Big organisations and institutions often take out vast loans of lakhs and crores to run their business. In this case, constantly measuring credit scores become essential. Local governments, companies, non-profit organisations, state governments are some of the most prominent institutes that use the services offered by these credit rating companies.

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List of Top 8 Credit Rating Agencies in India

The 8 best credit rating agencies in India are the ruling companies that constantly work on measuring the creditworthiness of borrowers across the country. 

Some of the top agencies are:

1. ICRA Limited

This is one of the top credit rating companies in India. It was launched in 1991 in Gurugram. This credit rating agency's name was different previously. They changed it to ICRA Ltd afterwards.

They currently have four subsidiaries such as ICRA Nepal, ICRA Lanka, Consulting and Analysis, and Data Services and KPO.

They are also experienced in structured finance, insurance, financial rating, corporate debt, mutual funds, insurance, and other project and public based finance projects. The international credit agency Moody's Investors Service is the largest shareholder of ICRA Ltd.

2. Credit Rating Information Services of India Limited (CRISIL)

It is one of the oldest credit rating agencies in the country. The company went public in 1993 and was launched previously in 1987. Its headquarter is situated in Mumbai. This agency also acquired around an 8.9% stake of another credit rating agency called the CARE agency in the middle of 2017. They have expertise in unit-linked insurance plans, coalition index, mutual funds rating, among other services.

3. India Ratings and Research Pvt. Ltd.

And it is also one of the most reputed and renowned credit rating agencies that are a subsidiary of the Fitch group. It mainly offers credit ratings to several banks, reputable organisations, insurance companies, financial institutions, and corporate borrowers. 

They have also offered their services to finance and leasing companies, urban local bodies and managed funds over the years. This company received recognition from the Reserve Bank of India and the National Housing Bank.

4. Acute Ratings & Research Limited

It is a reputed credit rating agency that is registered by the SEBI. They also received an RBI accreditation in 2012. After that, they have successfully assigned 8300+ credit ratings to several bank facilities, debt instruments, and other entities across the country.

5. Brickwork Ratings (BWR)

It is one of the top credit rating agencies that are relatively new. It was launched in 2007 and was promoted by Canara bank. Their portfolio includes corporate governance rating, financial institutions, capital market instruments, SME, bank loans, and municipal corporations. They also offer their services to several real estate investments, NGOs, tourism agencies, hospitals, MNRE, MFI and educational institutions in the country.

6. Credit Analysis and Research Limited (CARE)

It was launched in the middle of 1993. They are experts in offering credit rating services to big organisations, state and local governments.

It is one of the highly-rated credit rating agencies in India that offers two different categories as short term & long term debt instruments and bank loan ratings.

This agency has also launched another international credit rating agency called 'ARC Ratings' while teaming up with different partners from different countries- Malaysia, Brazil, Portugal, and South Africa.

7. Infomerics Valuation and Rating Private Limited

It is a SEBI registered credit rating agency that is RBI accredited. It is currently run under the leadership of Mr Vipin Mallik. They offer a detailed analysis and credit reports to small to big scale units, corporate offices, and NBFCs. 

They make sure to give you an unbiased record that you can entirely rely on.

8. Onida Individual Credit Rating Agency of India(ONICRA)

It is a reputed credit rating agency in the country that offers excellent services of risk management, analytical solutions, mutual funding solutions, among other benefits. The unique factor about this agency is that they also provide their services to individuals. They are the ones that brought forth the idea of offering credit rating services to individuals.

This is the list of the credit rating agencies in India that are renowned and offer the best services in the country.

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How Credit Rating Agencies Work

The sole focus of the credit rating agencies remains on analysing big companies, entities, organisations, NGOs, state or local governments, and other institutes and preparing a credit rating report for them.

Different metrics and factors are involved in the procedure. Your type of debt, financial statements, borrowing history, past borrowed amount, repayment responsibility, your history of making regular repayment, and other things are considered. Each of these factors is minutely examined by your potential lenders or before they grant you or your company a loan.

These agencies do not directly state whether or not you are eligible to apply for credit cards and loans but make it evident for the lenders to understand whether you are a responsible borrower or not.

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Credit Rating Agencies FAQs

✅What is the difference between credit ratings and credit scores?

Both give credit reports based on repayment history, past borrowed amounts, and the responsibility of the borrower. The only difference is the fact that a credit rating generally expresses the creditworthiness and commitment of a state or local government or big companies and organisations. On the other hand, a credit score determines the creditworthiness of individuals typically.

✅Who regulates credit rating agencies?

Primarily in India, the Securities and the Exchange Board of India (SEBI) regulates all the top credit rating agencies.

✅How can borrowers benefit from a good credit rating?

When your company has a good credit rating of 850 or above, you will easily be granted loans and credit cards that you apply for. Extra rewards and financial benefits are also offered to those companies that have a good credit rating.

Your company's loans will be approved much earlier when you have a good credit rating.

Many lenders offer pre-approved loans to several organisations that remain to have a good credit rating for an extended period of time.

✅What are the three leading credit rating agencies?

There are several reputed credit rating agencies in the country, including CARE, BWR, ICRA Ltd, CRISIL, Acute Ratings & Research Ltd., among others. They all provide excellent services when it comes to measuring your company's credit rating. Their reports are unbiased that you can easily rely on.

✅What are the 5 C's of credit?

The 5 C's in credit refer to collateral, capacity, capital, character, and conditions.