Understanding Credit Rating Agencies in India: A Comparative Perspective

Understanding Credit Rating Agencies in India: A Comparative Perspective

HEMANTH KUMAR MS1

Research Scholar,

Department of Management Studies,

Visvesvaraya Technological University-Research Centre,

Muddenahalli, Chikkaballapur-562101.

E-Mail: hemuhemu1829@gmail.com

Dr. HH.RAMESHA2

Associate Professor & Program coordinator,

Department of Management Studies,

Visvesvaraya Technological University-Research Centre,

Muddenahalli, Chikkaballapur-562101.

drhhramesh@vtu.ac.in

“Credit rating helps investors by providing an easily recognizable simple tool that couples a possibly of unknown issuer with an 
informative and meaningful symbol of credit quality”
(Standard & poor’s)

Abstract

This paper provides a descriptive analysis of the credit rating processes employed by major credit rating agencies in India, including CRISIL, ICRA, and CARE. The Indian economy's volatility poses challenges for investors, making the role of credit rating agencies crucial in assessing the creditworthiness of financial instruments. These agencies employ unique methodologies, rating instruments from AAA to D, based on various parameters, reflecting their risk assessments. While these ratings aid investors in making informed investment decisions, they also raise awareness about the associated risks, promoting cautious investment behaviour. The study highlights the similarities and differences in the methodologies used by these agencies, offering insights into their ratings' reliability and effectiveness.

Key words:  Credit Rating Agencies, Indian Economy, Investment Decision, Creditworthiness, Risk Assessment.