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Credit Rating Agencies in India
The Indian credit rating agency has evolved over a period of time. Indian credit rating agencies include mainly CRISIL, ICRA, CARE, FITCH and Brickworks. CRISIL is the largest credit rating agency in India, with a market share of greater than Sixty percent. Table I shows CRAs registered with SEBI.
The role of the credit rating agencies has been very critical and significant for the vibrant financial system. The option of credit agencies plays a significant role when it comes to making investment in financial market of the country. The growth of the corporate sector depends upon the vibrant financial and capital market of any country. But due to volatility and the huge risk involved in the financial market of the country, credit rating can make guidance role for the investor. Thus Credit rating is an investor service and a rating agency is expected to maintain the highest possible level of analytical competence and integrity. The analytical framework of rating deals with anticipation of risks and calculation of expected return in the market. Credit ratings provide balance approach between risk and return. Given the ups and down faced by economies globally and the rise in the rate of default always creates doubt in the mind of the investor. In fact, the rating facilitated the market to soar and caused its sudden downfall during 2007-08 and which mainly resulted into the subprime crisis into the USA financial market. The USA subprime crisis resulted into the financial tsunami which created havoc the havoc across global financial markets and firms. This makes a strong case for the case of the credible credit rating agencies.
Keywords: Credit rating, Financial markets, Business and Financial risk.
Objective, Methods and Sources
This study employs both analytical and descriptive type of method. The methodology of the study is based on Secondary data collected through internet, Government documents, newspapers, published reports, books and paper published by various intellectuals and academician in various conferences and seminars at the national and international level. The basic objective of this paper is to analyze about the role played by Credit rating Agencies (CRAs) for the sake of the Investor and development of the financial market in India. The paper will further investigate what...