Consider the following statements:
1. In India, credit rating agencies are regulated by the Reserve Bank of India.
2. The rating agency popularly known as ICRA is a public limited company.
3. Brickwork Ratings is an Indian credit rating agency.
Which of the statements given above are correct?
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
Ans: b
Explanation:
A credit rating agency is an entity which assesses the ability and willingness of the issuer company for
timely payment of interest and principal on a debt instrument. Credit rating is an assessment of the
probability of default on payment of interest and principal on a debt instrument. The debt instruments rated by CRAs include Government bonds, Corporate bonds, CDs, Mortgage – backed securities and Collateralized debt obligations.
Rating is denoted by a simple alphanumeric symbol, for e.g. AA+, A- etc. Ratings are based on a comprehensive evaluation of the strengths and weaknesses of the company fundamentals including financials along with an in depth study of the industry as well as macro-economic, regulatory and political environment.
Credit rating agencies are regulated by SEBI.
Hence, statement 1 is incorrect.
Domestic Credit rating agencies registered with SEBI are
Credit Analysis & Research Ltd (CARE) ,
Investment Information and Credit Rating Agency of India Limited (ICRA Ltd ),
Credit Rating and
Information Services of India Ltd (CRISIL),
Fitch Ratings India Pvt Ltd ,
Brickwork Ratings India Pvt.Ltd.,
SME Rating Agency of India Ltd (SMERA) – Small &Medium Enterprises Rating Agency of India
Ltd., a joint initiative of SIDBI, DUN & BRADSTREET and leading banks .
Some international credit rating agencies – Standard & Poor (S&P), Moodys , Fitch .
Credit
Hence, statement 3 is correct.
Investment Information and Credit Rating Agency of India Limited (ICRA Ltd ) was set up in 1991 by leading financial/investment institutions, commercial banks and financial services companies as an independent and professional investment Information and Credit Rating Agency.
Today, ICRA and its subsidiaries together form the ICRA Group of Companies (Group ICRA). ICRA is a Public Limited Company, with its shares listed on the Bombay Stock Exchange and the National Stock Exchange.
Hence, statement 2 is correct.
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