Economics - Credit Rating - Notes - Economics, Study notes of Economics

Download Economics - Credit Rating - Notes - Economics and more Study notes Economics in PDF only on Docsity! CREDIT RATING With the development of finance market, number of institutions started operating in a very tough competitive atmosphere and thus, many companies came out with varied and attractive investment schemes. To invest an investor must assure himself of all the risks involved and therefore, the need was felt to have credit rating agencies that should work independently and rate the companies. America is the mother of credit rating where it was introduced in 1909. Credit rating is a codified rating assigned to an issue by authorized credit rating agencies like CRISIL, CARE and ICRA extra. These agencies have been promoted by well established financial institutions like IDBI, ICICI, UTI etc. Credit rating is a relative raking through a systematic analysis of the strengths and weakness of a company based on financial statement project analysis, credit-worthiness etc. Objectives of Credit Rating Credit rating has the following objectives:- 1) To provide a better information to the investors. 2) To provide the investor a sound basis for proper risk - return structure. 3) To teach the borrower a healthy discipline. 4) To assist in framing the guidelines for public policy on institutional investment. Contents Credit Rating agencies in India. Rating methodology. 1. Credit Rating agencies in India