In India, credit rating agencies evaluate the creditworthiness of an individual or a business. The credit rating acts as a critical aspect based on which lending institutions confirm or reject loan applications. 

Read on to know about credit rating agencies in detail!

A credit rating agency assesses an individual or a business's creditworthiness based on one's income and credit lines. Lenders refer to the credit rate or score to analyse borrowers' repayment capacity and any associated credit risks. These credit-rating agencies are authorised and regulated by SEBI (Securities and Exchange Board of India) under SEBI Regulations, 1999 of the SEBI Act, 1992.

The next segment will precisely discuss the top 7 credit rating agencies in India.

Wondering which credit rating agency is the best in India? Here, we have listed the top 7 SEBI registered credit rating agencies in this nation. They are -

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

Established in 1987, this credit rating agency is one of the oldest in India. Apart from India, it operates in countries like the USA, UK, China, Poland, Argentina and Hong Kong. CRISIL primarily computes the creditworthiness of commercial entities as per market reputation, market share, board and capacity. Moreover, since 2016, CRISIL has expanded into infrastructure rating and acquired an 8.9% share in CARE credit rating agency in 2017. 

Furthermore, it introduced the first index to benchmark investment performance of foreign portfolio investors (FPI) in the fixed-income market, both in rupee and dollar versions, in 2018. CRISIL's portfolio is inclusive of:

• Unit Linked Insurance Plans (ULIP) rankings
• Mutual funds ranking
• CRISIL coalition index and more

Registered Address and Contact Details

CRISIL Limited, CRISIL House, Central Avenue, Hiranandani Business Park, Powai, Mumbai: 400076

Tel: + 91 (22) 33423000

Fax: + 91 (22) 33423810

Email: info@crisil.com

2. Investment Information and Credit Rating Agency of India (ICRA)

ICRA, set up in 1991, employs a transparent rating system and assigns-

• Corporate governance rating
• Mutual funds rating
• Performance rating
• Market linked debentures
• SME
• Project and public finance
• Structured finance rating and more

ICRA entered into a joint venture with Moody's Investors Service and some Indian financial and banking service institutions before going public in 2017. Besides, it is currently the largest shareholder of Moody's. At present, it has 4 subsidiaries, including:

• Consulting and Analytics
• Data Services and KPO
• ICRA Lanka
• ICRA Nepal

Registered Address and Contact Details

1105, Kailash Building, 11th Floor 26, Kasturba Gandhi Marg, New Delhi: 110 001

Tel: + 91 (11) 23357940 – 50

Fax: + 91 (11) 23357014

Email: info@icraindia.com

3. Credit Analysis and Research Limited (CARE)

Starting operations in 1993, the CARE credit rating agency has regional offices in Kolkata, New Delhi, Bengaluru, Chennai, Pune, Ahmedabad, Jaipur, Hyderabad and Coimbatore. It evaluates 2 types of bank loan rating:

• Short-term debt instrument
• Long-term debt instrument

Investors employ CARE's credit rating to make informed choices regarding credit risks and risk-return expectations. Moreover, CARE assists organisations in raising funds to fulfil investment requirements. It also rates:

• Initial Public Offerings (IPO)
• Renewable energy service companies (RESCO)
• Real estate
• Energy service companies (ESCO)
• Financial assessment of shipyards and others

The CARE ratings assist valuation services and provide equity valuation, debt instruments and market-linked debentures. In addition, CARE has introduced the latest international credit rating agency 'ARC Ratings' in association with 4 partners from Portugal, Malaysia, South Africa and Brazil. 

Registered Address and Contact Details

4th Floor, Godrej Coliseum, Somaiya Hospital Road, Behind Everard Nagar, Off Eastern Express Highway, Sion (E), Mumbai: 400 022

Tel: + 91 (22) 566 02871/ 72/73

Fax: + 91 (22) 566 02876

Email: care@careratings.com

4. Acuite Ratings and Research

Formerly known as the Small Medium Enterprises Rating Agency of India (SMERA), Acuite Ratings and Research, a full-service credit rating agency was established in 2005. It has 2 primary categories to assess the credibility of MSMEs (Micro, Small and Medium Enterprises):

• Bonds ratings
• SME ratings

Additionally, in 2012, Acuite received RBI Accreditation as an External Credit Assessment Institution (ECAI) for Bank Loan Ratings under BASEL-II standards. 

Registered Address and Contact Details

Unit No.102, 1st Floor, Sumer Plaza, Marol Maroshi Road, Marol, Andheri (East), Mumbai: 400 059

Tel: + 91 (22) 67141144/45

Fax: + 91 (22) 67141142

Email: info@acuite.in

5. India Rating and Research Private Limited (Ind-Ra)

Set up in 1995, the Ind-Ra is a completely-owned Fitch Group subsidiary, providing credit rating for the below entities:

• Insurance companies
• Corporate issuers
• Banks
• Financial organisations
• Project finance
• Managed funds
• Urban local entities
• Finance and leasing corporations 

Other than SEBI, India Rating is authorised by RBI and National Housing Bank. The other branches of India Rating lie in Delhi, Kolkata, Bengaluru, Chennai, Hyderabad, Ahmedabad and Pune.

Registered Address and Contact Details

Wockhardt Towers, 4th Floor, West Wing, Bandra Kurla Complex, Bandra East, Mumbai: 400 051

Tel: + 91 (022) 40001700

Fax: + 91 (022) 40001701

Email: investor.services@indiaratings.co.in

6. Brickwork Ratings (BWR)

Founded in 2007, BWR is promoted by Canara Bank, serving as a strategic partner. Besides SEBI, BWR is RBI registered as an external credit assessment agency (ECAI) and enrolled by MSME, NCD and NSIC rating services. The working mechanism of BWR includes assigning credit ratings to:

• Bank loans
• Capital market instruments
• SMEs
• Municipal corporations
• Real estate investments
• Hospitals
• MFI
• NGOs 
• Educational institutions
• Tourism 
• IPOs 
• MNRE
• IREDA

Moreover, it offers various rating systems regulated by several financial instruments.

Registered Address and Contact Details

3rd Floor, Raj Alkaa Park, 29/3 & 32/2, Kalena Agrahara, Bannerghatta Road, Bangaluru: 560 076

Tel: +91 (80) 4040 9940

Fax: +91 (80) 4040 9941

Email: info@brickworkratings.com

7. Infomerics Valuation and Rating Private Limited

This credit rating agency was established in 2015 by former finance professionals, bankers and administrative service personnel and is accredited by RBI. The bureau strives to provide unbiased assessment and creditworthiness evaluation of the following entities through their rating and grading system.

• Banks
• Small and medium-scale units (SMUs)
• Non-banking financial companies (NBFCs)
• Large corporate

Additionally, it aims to bring down all sorts of information asymmetry among investors and lenders. Maintaining transparency as its core policy, Infomerics assures its clients comprehensive and authentic reports and credit ratings.

Registered Address and Contact Details

Flat No. 104/108, 1st Floor, Golf Apartments, Sujan Singh Park, New Delhi: 110003

Tel: + 91 (11) 24601142, 24611910, 24649428

Fax No.: + 91 (11) 24627549

E-mail: vma@infomerics.com

The working mechanism of these agencies comprises critical inspection of a debtor and rating them accordingly. In lieu of SEBI's authorisation, these credit rating agencies can evaluate and rate organisations, non-profit corporations, local government, State government, securities, countries and other entities.

Credit rating agencies factor in the following points that contribute to calculating the credit score. They are:

• Financial statements
• Debit type
• Borrowing record or history
• Repayment capacity
• Past repayment pattern and others

It is worth noting that a credit rating agency does not interfere in the decision-making of financial institutions on whether to approve the loan application or not. It only helps with credit reports and additional information to accelerate and simplify the loan approval process for the investors. In simple words, the credit rating provided by the agencies acts as a benchmark of financial market regulations.

With a detailed discussion of credit rating agencies in India, we have reached the end of this piece.