Top Credit Rating Agencies in India: Why They Matter?

Have you noticed how companies and financial institutions in India raise money and how people assess their creditworthiness? The answer is in their credit ratings, which show their financial health and ability to repay. These ratings are issued by the Credit Rating Agencies in India, which analyse financial performance, market conditions and repayment history of companies that help investors and lenders understand the risks before making any investment.

Now, the question is which are the top credit rating agencies in India and what services they provide? Dive into this post to know them and uncover the real influence these agencies hold over your financial decisions.

What is a Credit Rating Agency?

A Credit Rating Agency is a company that measures a debtor's ability to repay debts on time based on their repayment patterns. There are Certain debt instruments rated by CRAs, which include government bonds, Corporate bonds and collateral securities. The Credit Rating Agencies perform a rating test based on certain factors such as financial statements, debtors' worth, debt type, collateral type and past repayment history.

Credit Rating Agencies play a vital role in shaping key decisions in the financial sector. The ratings assigned by these agencies influence the risk management, capital market development and regulatory requirements.

Key Functions of Credit Rating Agencies

CRAs perform several critical functions for financial markets, investors and borrowers. The key functions include:

• Credit Risk Assessment
  

  CRAs analyse in detail the financial position, economic health and any previous repayment history to determine the credit rating and assess the risk involved in the lending process.

• Protect Investors' Interest
  

  The CRAs conduct an unbiased & independent opinion as they do not have any interest like financial intermediaries. This protects investors' interests and helps them in deciding to invest in an entity.

• Help Companies Raise Funds
  

  While raising funds, companies are rewarded with a lower interest rate if rating agencies rate them higher, whereas lower-rated companies have to pay higher interest.

• Enhance Market Transparency
  

  Credit rating agencies conduct all financial reviews transparently, which helps maintain trust in the financial system.

• Continuous Monitoring
  

  They used to monitor and update ratings based on the market conditions, new information, or company performance on a regular basis to keep investors informed of their decisions.

• Support Regulatory Compliance
  

  The ratings assigned by Credit Rating agencies can determine the eligibility of securities such as Mutual Funds and pension funds for inclusion or exclusion in institutional portfolios.

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Now, let us look at the list of the top credit rating agencies in India.

Top Credit Rating Agencies in India

India has a strong network of credit rating agencies that actively study the credit risk for the interest of investors. The Top Credit Rating Agencies in India are:

1. CRISIL
2. ICRA
3. CARE
4. India Ratings And Research Private Limited
5. Acuite Ratings And Research Limited

Must Read: Top 10 AMC in India 2026: Listed by AUM

Let us move on and dive into the details of these top agencies in India.

Overview of the Top Credit Agencies in India

Here are some details about the top credit rating agencies in India:

1. CRISIL

Credit Rating Information Services of India Limited (CRISIL) was set up in 1987 and is the oldest credit rating agency. CRISIL has a presence in many countries, including the United States, the United Kingdom, Australia, Japan, Poland, Singapore and the United Arab Emirates. The CRISIL offers a wide range of services, including:

• Credit ratings for debt instruments.
• Research, data & analytics.
• Consulting & advisory services.
• ESG & sustainability analytics.

2. ICRA

ICRA, which stands for “Investment Information and Credit Rating Agency,” was founded in 1991. ICRA is a BSE and NSE publicly listed company. Moody’s Investor Services is the major shareholder in ICRA, which also gives access to a global platform for research and analysis. ICRA is a dedicated service provider of credit ratings and analytics. The services include:

• Rating of structured obligations and sector-specific debt.
• Research, analytics, information services.
• Credit-rating debt instruments.
• Consulting/advisory/analytics solutions (via subsidiaries).
• Offers services of ESG-rating via its subsidiary ICRA ESG Ratings Limited.

3. CARE

CARE (Credit Analysis & Research Limited) is ranked India’s second-largest by rating income after the top agency. CARE was incorporated in April 1993 and rebranded itself in 2017 under the name Care Ratings. While CARE is headquartered in Mumbai, mainly serving India, but over time, it has made its presence internationally through subsidiaries and partnerships. CARE is involved in a broad spectrum of analytics and rating services. Some of its core services are:

• Credit ratings for corporate debt instruments.
• Grading & other specialized ratings.
• Research, analytics and risk solutions.
• ESG & global-scale ratings.

4. India Ratings and Research Private Limited

India Ratings & Research (Ind-Ra) was incorporated in 1995 and is a 100% owned subsidiary of Fitch Group. It is located in Mumbai but provides services all over India through its network of branch/regional offices in major Indian cities. Ind-Ra not only rates corporate bonds, but it also covers primary services that include:

• Credit ratings for corporates, NBFCs/financial institutions, banks and insurers.
• Structured finance/project-finance ratings.
• Research, analytics, macroeconomic outlooks, sectoral research, & credit-market intelligence.
• Ratings for various debt instruments.

5. Acuite Ratings and Research Limited

Acuite is a public unlisted company incorporated in 2005. Its registered and corporate head office is located in Mumbai, but it provides services beyond Mumbai, covering clients across India. Acuite offers a broad range of research and analysis services:

• It provides credit ratings for bank loans, debt instruments, structured finance, bonds, etc.
• Acuité is also engaged in research, risk assessment and analytics.
• It also has subsidiaries for specialised services.

In the next part, let us understand what is a credit rating scale.

What is a Credit Rating Scale?

A credit rating scale makes it easy for investors to judge how much risk is attached to an investment. They use simple symbols that tell how likely a company or borrower is to repay its dues.

LONG-TERM CREDIT RATING SCALE

Agencies like CRISIL, ICRA, CARE, Ind-Ra and Acuité use the long term credit rating scale to assess loans and bonds over a year.

The table below shows investment grade ratings from AAA (highest safety) to BBB (moderate safety).

Investment Grade (Good to Moderate Credit Quality)

Category	Meaning
AAA	Highest safety, lowest credit risk
AA+ / AA / AA-	Very high safety, very low credit risk
A+ / A / A-	High safety, low credit risk
BBB+ / BBB / BBB-	Moderate safety, moderate credit risk

Non-Investment Grade (High Risk / Speculative)

Non-investment grade ratings show higher risk or speculative loans and bonds. The table below breaks it down from BB (moderate risk) to D (default).

Category	Meaning
BB+ / BB / BB-	Moderate risk: likely to be affected by adverse conditions
B+ / B / B-	High risk: vulnerable to default
C	Very high risk: near default
D	Default

SHORT TERM CREDIT RATING SCALE

The short-term credit rating scale rates instruments like commercial paper and short term NCDs under one year. The table below shows ratings from A1+ (safest) to D (default).

Rating	Meaning
A1+	Highest safety; lowest ST credit risk
A1	Very strong degree of safety
A2+ / A2 / A2-	Strong degree of safety; moderate risk
A3+ / A3 / A3-	Moderate safety; higher risk
A4+ / A4 / A4-	Minimal safety; substantial risk
D	Default

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Let us understand the working of these agencies next.

How Credit Rating Agencies Work?

The evaluation process through which a credit rating agency (CRA) calculates the borrower’s ability to repay debt on time. The entire process is systematic, data-driven and regulated by SEBI and equivalent agencies. Here is how credit rating agencies work:

• The requesting entity enters into a mutual agreement with CRA, like CRISIL, ICRA, CARE, etc. The CRA then begins the rating process.
• The CRA collects financial statements, cash flows, assets, liabilities and industry data, sometimes conducting on-site audits.
• Analysts study the issuer’s finances, debt, liquidity and growth. They also consider external factors such as market and industry risks.
• A separate Rating Committee reviews all the information and makes a fair decision based on the information collected.
• The committee assigns a rating grade based on risk, such as AAA (highest grade), BBB (Moderate safety) or C/D (very high risk or default).
• The CRA informs about the rating to the issuer before publication. If the issuer disagrees, they can request a revision or provide more information.
• Once the rating is finalized, CRA publishes it on its website. It is also shared with regulators and investors to help in their decision-making.
• The CRA continuously monitors the issuers’ new final statements, debt repayments and market updates. The rating agency reviews the rating if the condition changes.

Also Read: How to Increase CIBIL Score in India? 10 Ways to Improve It

In the next section, you will explore the regulations on these agencies, so keep reading.

Regulation of Credit Rating Agencies in India

Credit Rating Agencies in India are strictly monitored by the Securities and Exchange Board of India (SEBI). SEBI introduced the regulatory compliance under the SEBI (Credit Rating Agencies) Regulations, 1999.

SEBI ensures that CRAs follow strict regulations and all the policies, so the trust in the rating is maintained among investors. It also ensures the quality of their work, independence, & accountability.

The CRAs operate under major regulations, like:

• Registration Required
  

  CRA must register with SEBI before starting its venture, as only registered agencies can issue ratings in India.

• Minimum Net Worth
  

  The CRA should fulfil the minimum net worth requirement by the SEBI, ensuring an unbiased and high-quality analysis.

• Independence & No Conflict of Interest
  

  CRAs must avoid rating their own related companies, where board members have an interest, or providing consultancy to the same companies they rate.

• Mandatory Disclosure
  

  CRAs must declare rating rationale, key assumptions, risks, data sources and any other limitations.

• Continuous Monitoring
  

  After issuing a rating, it is CRA's utmost priority to monitor it regularly. In case of any change in the company’s condition, the rating must be updated immediately.

• Standard Rating Symbols and Scales
  

  CRAs must follow only SEBI-approved symbols for rating, such as AAA, AA, BBB, etc., so investors easily and quickly understand the analysis conclusions.

• Code of Conduct
  

  The CRAs are required to follow a strict code of conduct to ensure transparency, responsibility, & professional practices.

Now lastly, let us know what the importance of these agencies is in the country’s economy.

Importance of CRAs in the Indian Economy

Credit Rating Agencies in India guide the fund providers and help fundraisers to raise funds for their needs. Here is a glimpse of why they are essential for any economy:

1. Companies with higher credit ratings can borrow money at lower interest rates. This helps them to reduce the cost of capital and enables them to expand their operations and grow faster.
2. CRAs analyse every aspect of the borrower, which provides clear and transparent reports that help lenders understand the actual financial status of the issuer.
3. CRAs evaluates credibility of government and PSU bonds, making it easier to raise funds for various programs like Infrastructure, Energy or transport sector development & social programs.
4. By identifying financially weak entities, CRAs help prevent large-scale defaults & risks in the economy. Their rating works as an early warning mechanism for investors and lenders.
5. Global investors are heavily dependent on credit ratings when investing in the Indian market. Strong rating attracts more foreign capital in the Indian market, accelerating economic growth.
6. Regulators like SEBI, RBI and IRDAI rely on credit ratings to frame regulations for bank investments, Insurance companies, NBFC funding and Mutual Fund debt allocation.
7. Banks, Mutual Funds, NBFCs and corporates use CRA ratings for internal valuations to decide interest rates, collateral needs and exposure limits, avoiding significant financial losses.

CRA helps fund providers understand how safe or risky an investment is. A higher credit rating ensures trustworthiness and timely repayment of the funds by the borrower. 

Conclusion

Credit rating agencies in India act as the backbone of the credit market. Maintaining trust and transparency in the assessment of credit risk. The agency functions through a systematic, data-driven analysis of financial status, repayment history, market conditions and government policies.

Their rating helps both lenders & borrowers to utilize funds to their full potential at a profitable cost. The credit rating agencies are regulated by SEBI, which helps enhance market confidence, transparency & establishing overall financial stability & economic growth.

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Frequently Asked Questions

1. Are credit ratings helpful for retail investors?
   

   Yes, they help retail investors understand risk easily without deep financial analysis.

2. Do credit ratings guarantee investment safety?
   

   No, credit ratings only indicate risk levels but do not guarantee returns or protect against market ups and downs.

3. Are Indian credit ratings accepted globally?
   

   They are widely accepted in domestic markets; though global investors may also consider international ratings.

4. What is the primary purpose of a credit rating?
   

   Their primary purpose is to show how likely a borrower is to repay their debt on time.

5. Do mutual funds use credit ratings?
   

   Yes. Mutual funds rely on ratings to select safe debt instruments for their portfolios.