Role of Credit Rating Agencies in India
In this article, we will discuss the role of credit rating agencies in India, the Top credit rating agencies in India. We make it clear that after reading this article, you will understand the role of credit rating agencies in India.
What is the Role of Credit Rating Agencies in India
It was in the winter of 2013, India’s Central Bank Governor Dr. Raghuram Rajan memorial lecture in his Aima Mater, one of the famous premier institutes of the country, IIT Delhi. Question answers were pouring from students. Suddenly, Mr. Rajan stopped abruptly and looked at his watch. He apologized to his audience as he had to go to an urgent meeting that could possibly decide the fate of investments in the next few years.
It was not with the head of state but with representatives of credit agencies. This is the kind of influence these organizations have on the economic future of the country in the modern internet-connected economic world. They hold great power and leverage but as they say, with great power comes great responsibility. Economic forecasting is nothing new to state policymakers and economists. In search of predictability, both players in the economic framework and investors look for a forecast.
The “Bandobast” of Todarmal in Akbar’s regime & price policy of Allauddin Khalji aimed to provide a sense of stability and pattern. In the modern world, this role is largely played by credit rating agencies. These are National or International Organizations that rate the investment options both government and private on the basis of invisibility on certain parameters. The use of international financial markets and the coming of exceedingly complicated products have made their jobs quite complex. But, their job is not only complex, but it’s also exceedingly important too.
What is the Impact of Credit Rating Agencies?
Moreover, in 2008 when the New York stock exchange collapsed and television channels across the world showed proving pictures of teary-eyed pensioners’ whole lifelong savings got dissolved. When they had invested in top-rated financial instruments in the opinion of all major Agencies. Corporations collapsed and all major banks face stress. Till very recently, some in recession, economic like Cyprus, Greece, and Spain showed to have a better rating than emerging countries like India.
But, it is not only limited to credit rating agencies. Economic forecasting has been a shady exercise always. Last time, when all the predictions in the targets of a Five Year Plan in India came true. Even in the budget, forecasting has been grossly invacuating raising concerns and demands for better fiscal.
Facts about Credit Rating Agencies in India
Economic itself is a fast-changing and unpredictable pursuit as a recent Chinese Market collapse shows. When there is an economic bubble on overpriced Assets and enhanced risk waiting to burst, credit rating agencies like all other economic actors find themselves inside it being an awareness as well as having a stake in it.
Moreover, credit rating agencies in particular and economic forecasting in general use data as feedstock. Increments and corporations manipulate that as Greece did, Credit Scoring Agencies and forecasters can hardly be blamed. Finally, the government engages in an unpredictable way with the economic system. Quantitative easing and pullouts can hardly be predicted.
Important Facts of Credit Rating Agencies in India
Who Regulates Credit Rating Agencies in India in 2022
Credit Rating Agencies in India are regulated by the Securities and Exchanges Board of India (SEBI).
List of Top Credit Rating Agencies in India
- India Rating and Research Pvt. Ltd.
- Acute Ratings & Research Limited
- Infomerics Valuation and Rating Private Limited
- Credit Analysis and Research Limited (CARE)
- ICRA Limited
- Credit Rating Information Services of India Limited (CRISIL)
