Uttam wrote:I am not as well informed as Suraj, but I'll give it a try.
Ultimately, it depends on who do the investors trust. I can create my own credit rating agency but it will not matter if the investors do not take its words. It will take very long time to establish a credit agency that is trusted.
But we have to start somewhere.
That's why we need a credit rating agency which is not owned by the big ones. Such a credit rating agency can be created using equity consideration from banks and NBFCs, where no one owns more than 5% of its stocks. .
Your posts on these have been great! Please keep adding further.
Right now there are three ratings agencies in India: CRISIL
: Majority owned by S&PICRA
: Majority owned by Moody'sCARE
: apparently independent, created the ARC Ratings
along with consortium of G20 nations as an alternative to the Big 3. They don't offer sovereign credit ratings , as far as I can tell.
In addition, there are credit information bureaux :Transunion CIBILCRIF HighMark
Equifax and Experian
Once again, except for one, the others are owned by foreign credit bureaux, something I think is not just a problem from a financial perspective, but has a major national security and data privacy consequence, despite data localization requirements imposed by India.
In my opinion, the government needs to mandate that foreign shareholdings in both credit information bureaus and ratings agencies needs to be below 50%, and that the government itself must be the single largest shareholder in these.
Not from economics or finance background. But in the year 2016-17 while taking decision to invest in stocks of credit rating agency (CRISIL/ ICRA/CARE) did good amount of reading about them & subsequently made some money also.
In fact big bull Rakesh Jhunjhunwala
made considerable money from CRISIL stock & in one of his old interviews he spoke on depth why he is bullish on Credit Rating Agencies. In his words "As economy progresses & becomes more big & complex/sophisticated more such institutions are required. No economy have progressed from 2 tn$ to 8 or 10 tn$ economy without proper financial market & Independent Credit Rating agencies are a fundamental building block for that." (if I remember correctly he briefly spoke & given example of China also).
That time this statement of RJ encouraged me to read about them............
So knew a bit & the topic attracted me. In fact I was about to post this yesterday night itself but due to internet speed problem & tantrums of SHQ saved the daft. Anyway.........
Though the gist is mostly covered previously by Suraj sir & other member's posts, still...... Here are they........
1. Credit Rating Information Services of India Limited (CRISIL)
CRISIL is one of the oldest credit rating agencies in India. It was launched in the country in 1987 following which the company went public in 1993. Headquartered in Mumbai, CRISIL ventured into infrastructure rating in 2016 and completed 30 years in 2017. CRISIL is a subsidiary of American company S&P Global. In 2005, S&P acquired the majority shares of company.
2. ICRA Limited
ICRA Limited is a public limited company that was set up in 1991 in Gurugram. The company was formerly known as Investment Information and Credit Rating Agency of India Limited. Before going public in April 2007, ICRA was a joint venture between Moody’s
and several Indian financial and banking service organisations. The ICRA Group currently has four subsidiaries - Consulting and Analytics, Data Services and KPO, ICRA Lanka and ICRA Nepal. At present, Moody’s Investors Service, the international Credit Rating Agency, is ICRA’s largest shareholder.As of 2014, Moody's Corporation owns a 50.06% majority stake.
3. Credit Analysis and Research limited (CARE)
Launched in 1993, CARE offers credit rating services to areas such as corporate governance, debt ratings, financial sector, bank loan ratings, issuer ratings, recovery ratings, and infrastructure ratings. Headquartered in Mumbai, CARE offers two different categories of bank loan ratings, long-term and short-term debt instruments. The company also offers ratings for Initial Public Offerings (IPOs), real estate, renewable energy service companies (RESCO), financial assessment of shipyards, Energy service companies (ESCO) grades various courses of educational institutions. CARE Ratings has also ventured into valuation services and offers valuation of equity, debt instruments, and market linked debentures. Moreover, the company has launched a new international credit rating agency ‘ARC Ratings’ by teaming up with four partners from South Africa Brazil, Portugal, and Malaysia. ARC Ratings has commenced operations and completed sovereign ratings of countries, including India. CRISIL acquired 8.9% stake in CARE credit rating agency in 2017.
4. Brickwork Ratings India Pvt Ltd:
Brickwork Rating was established in 2007 and is promoted by Canara Bank, in fact Canara Bank was strategic planner for Brickwork. It offers ratings for bank loans, SMEs, corporate governance rating, municipal corporation, capital market instrument, and financial institutions. It also grades NGOs, tourism, IPOs, real estate investments, hospitals, IREDA, educational institutions, MFI, and MNRE. Brickwork Ratings is recognised as external credit assessment agency (ECAI) by Reserve Bank of India (RBI) to carry out credit ratings in India. In addition to registering with SEBI, Brickwork Ratings (BWR) is accredited by RBI and empanelled by NSIC, NCD, MSME ratings and grading services. It has received accreditation from NABARD for MFI and NGO grading. Brickwork is also authorised to grade companies seeking credit facilities from IREDA, Renewable Energy Service Providing Companies (RESCOs) and System Integrators (SIs).
5.Small and Medium Enterprises Rating Agency of India (SMERA)
Established in 2005, SMERA is a joint initiative of SIDBI, Dun & Bradstreet
India and leading banks in India. SMERA has joined hands with prominent institutions such as IIT Madras, The Bangladesh Rating Agency Limited, CAFRAL, CoinTribe, and SIES. Apart from its shareholder banks, SMERA has also entered into MoUs with over 30 Banks, Financial Institutions and Trade Associations of the country. SME Rating Agency of India (SMERA) is a ratings and research agency exclusively set up for micro, small and medium enterprises (MSME) in India. It provides ratings which enable MSME, SMEs, to raise bank loans at competitive rates of interest.. SMERA now operates as a separate division of Acuité Ratings & Research Limited. Acuité Ratings is a full service credit rating agency approved by Reserve Bank of India (RBI) and registered with Securities Exchange Board of India (SEBI).
6.Infometrics Valuation and Rating Pvt Ltd:
This SEBI-registered, RBI-accredited credit rating agency was founded by finance professionals, former bankers, and administrative services personnel. It evaluates entities such as banks, non-banking financial companies, large corporates, and small and medium scale units (SMUs).
7.India Rating and Research Pvt. Ltd. (FITCH India)
India Ratings and Research (Ind-Ra) is a credit rating agency that provides time-bound, accurate and prompt credit opinions. It is 100% owned subsidiary of the Fitch Group.
Ind-Ra covers corporate issuers, financial institutions, banks, insurance companies, urban local bodies, structured finance and project finance. Fitch‘s Ind-Ra is headquartered in Mumbai and has branch offices in Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad and Kolkata. Ind-Ra is recognised by Securities and Exchange Board of India, National Housing Bank and the Reserve Bank of India.
ONICRA Credit Rating Agency is the private rating agency established by Sonu Mirchandani under ONIDA Finance. It is headquartered in Gurugram, Haryana. The agency provides credit ratings, conducts risk assessment and provides analytical solutions to individuals, corporates and MSMEs. The solutions offered by the agency helps organisations take informed decisions about lending funds to individuals, MSMEs and other organisations. After its establishment in 1993, the agency has gained expertise in assessing micro, small and medium enterprises. It is one of the seven agencies licensed by the National Small Industries Corporation (NSIC) for the rating of SMEs. Onicra provides grading services as well. Its grading services include education grading, healthcare grading, solar energy grading and APMC grading. Onicra has signed MoUs with 16 banks and NBFCs in India to provide interest rate concession to up to 1% to top MSME units. It performs a wide range of tasks such as accounting, finance, analytics, customer relations and back-end management. More than 2500 SMEs have been rated by Onicra in the past two and a half decades.
9.Equifax India (Equifax Credit Information Services Private Limited, ECIS)Equifax India is a subsidiary of Equifax US
and was formed a joint venture
between the parent company and seven prime financial institutions in India (UBI, SBI, Bank of Baroda, Bank of India, Kotak Mahindra, Sundaram Finance and Religare).
10. Experian India
Experian India consists of two companies, Experian Credit Information Company of India Private Limited (provides credit information) and Experian Services India Private Limited
Aims to create information solutions enabling businesses to grow and give consumers faster, cheaper access to credit and other services. TransUnion CIBIL Limited
is a credit information company operating in India. It maintains credit files on 600 million individuals and 32 million businesses. TransUnion is one of four credit bureaus operating in India and is part of TransUnion, an American multinational group
12. CRIF High Mark Credit Information Services
CRIF High Mark Credit Information Services Pvt. Ltd. is an RBI approved credit bureau in India.It serves retail, agriculture and rural, MSME, commercial and microfinance. The company was incorporated in 2005 and is based in Mumbai. It launched its credit bureau operations in 2010 and has a database of over 120+ crore credit records as of July 2018
CRIF High Mark Credit Information Services Private Limited was formerly known as High Mark Credit Information Services Private Limited. High Mark was founded in 2007 by Dr. Anil Pandya with a vision of setting up India’s most comprehensive and most inclusive credit bureau.In 2014, CRIF, an Italy based firm acquired majority stakes in the company and the name changed to CRIF High Mark
CRIF holds 70% in CRIF High Mark.
Established in 1988 in Bologna (Italy), CRIF is a global company specialising in the development and management of credit reporting, business information and decision support.
CRIF High Mark's other shareholders include State Bank of India, Punjab National Bank, SIDBI, Edelweiss, Shriram City Union Finance, and Alpha, which is a consortium of microfinance institutions.Few brief observations:-
1. Top 3 CRISIL/ CARE/ ICRA holds 80-85% of market and revenue share. All top 3 are listed in NSE/BSE. High PE, high dividend stocks, given good returns for longterm investors.
However, we need at least one fully local credit rating agency. CRISIL under majority S&P control won't do. China has two - DaGong and ChenXing. Even Japan has its own - JCP.
Suraj, bar setting up our own agency, is there any way to basically bypass and show S&P, Moody and Fitch their place? They are basically holding our entire economic growth hostage.
2. Big or small corporate rating or mainly consumer rating , we find all most all of our Credit rating agencies have foreign hand. Ok accepted that initially to set them up or give credibility to a newly formed agency we may have required handholding & expertise from biggies but after 20-30 years of existence , now they own us full.
3. This is not political discussion or CT thread, and sooraj sir modertes OT posts quite stringently but still I will say this......