Explain the concept of Credit Rating Agencies

CRA’s [Credit Rating Agencies]-

• CRA’s are an integral part of the modern capital markets.
• CRA’s regularly analyzed the financial position of corporations and assign and revise the ratings for their securities.
• CRA’s continuously monitors the corporate and the rating is monitored till the life of the instrument. The ratings are a result of collective judgment of committee members.
• CRA’s in India are registered with the RBI

Functions of CRA’s-

• Helps investors
• easy understanding
• low cost of funds
• constant monitoring

Important CRA’s in India are-

• ICRA
• CARE
• ONICRA