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CRISIL Rating

CRISIL Credit Rating Overview

Last Updated 23rd Sep 2020

CRISIL is India’s first credit rating agency that provides credit ratings to debt instruments and institutions based on parameters such as the business strengths, its market share and portfolio performance.

CRISIL Full Form Credit Rating Information Services of India Limited
CRISIL Instruments Debt instruments and financial entities
Crisil Rating Parameters Business strengths, Market share and reputation
CRISIL Highest Rating Scale CRISIL AAA

What is CRISIL Rating?

CRISIL rating is the quantified credit rating issued to every debt instrument and financial entity by CRISIL. CRISIL stands for Credit Rating Information Services of India Limited. It is India’s first credit rating agency which was pioneered in 1937 in India to serve various stakeholders such as banks, NBFCs, lenders, investors, issuers, market intermediaries PSUs, financial institutions, state governments, urban local bodies, mutual funds and manufacturing companies.

Who does the CRISIL rating cater to?

CRISIL provides quantified ratings to the entire gamut of debt instruments and financial institutions to determine creditworthiness based on parameters such as business strengths, market share and reputation. These credit ratings help the borrowers and investors to access or invest the funds with credible financiers. Below mentioned is a list of few instruments which are provided rating by the CRISIL.

Debt instruments Financial institutions
Loans Manufacturing companies
Commercial papers NBFCs
Non-convertible debentures PSUs
Bonds State governments
Mortgage-backed securities Mutual funds

CRISIL Rating Scales: CRISIL provides credit ratings to debt instruments and financial institutions under seven categories.

1. Long-term instruments: For long-term instruments such as bonds, debentures and loans with a maturity period exceeding one-year CRISIL credit ratings are assigned from ‘CRISIL AAA’ to ‘CRISIL D. ’CRISIL AAA credit rating is assigned to the debt instruments which have the highest safety.

Rating Meaning
CRISIL AAA Highest safety
CRISIL AA A high degree of safety
CRISIL A An adequate degree of safety
CRISIL BBB A moderate degree of safety
CRISIL BB A moderate risk of default
CRISIL B High risk of default
CRISIL C Very high risk of default
CRISIL D Instruments in default

2. Short-term instruments: Short-term debt instruments include commercial paper, short-term debentures and loans within a maturity period of one year etc. CRISIL credit ratings are assigned from ‘CRISIL A1 to ‘CRISIL D’.

Rating Meaning
CRISIL A1 Very Strong degree of safety
CRISIL A2 Strong degree of safety
CRISIL A3 Moderate degree of safety
CRISIL A4 Minimal degree of safety
CRISIL D In default

3. Dual Ratings: Debt instruments which have an original maturity of more than one year but also have an option of put option exercisable within one year from the date of issue are assigned credit rating on both long term and short-term scale. Dual rating would be as follows CRISIL AA+/ CRISIL A1+.

4. Structured Obligations: CRISIL credit ratings assigned to structured finance instruments vary based on long-term and short-term scales. Long-term structured instruments have a maturity period exceeding one year, and short-term structured instruments mature within one year. The credit ratings range from ‘CRISIL AAA (SO)’ to ‘CRISIL D (SO)’ for the long-term instruments and ‘CRISIL A1 (SO)’ to ‘CRISIL D (SO)’ on the short-term instruments.

5. Credit Enhancement Ratings: Debt instruments that are backed by credit enhancement of third parties are assigned credit ratings under this category based on the maturity period. The credit ratings range from ‘CRISIL AAA (CE)’ to ‘CRISIL D (CE)’ on the long-term scale and ‘CRISIL A1 (CE)’ to ‘CRISIL D (CE)’ on the short-term rating scale as in long-term and short-term debt instruments.

6. Fixed deposits: FAAA is the highest credit rating provided for the fixed deposits indicating that the financier has the lowest risk of turning into default.

Rating Meaning
FAAA Highest safety
FAA High safety
FA Adequate safety
FB Inadequate safety
FC High risk
FD Default
NM Not Meaningful

7. Corporate Credit Rating: CRISIL assigns credit ratings to companies based on the company strength and how it handles debt obligations.

Rating Meaning
CCR AAA Highest degree of strength
CCR AA High degree of strength
CCR A Adequate degree of strength
CCR BBB Moderate degree of strength
CCR BB Inadequate degree of strength
CCR B High risk
CCR C Substantial risk
CCR D In default
CCR SD Specific Default

Credit Rating Scales for specific Debt Instruments

  • CRISIL Mutual Fund Rating: CRISIL mutual fund ranking is based on parameters such as risk-adjusted returns, asset concentration, liquidity and asset quality. It helps the investors to know about the average of daily returns on the net asset value in the defined time period. The investor can also know about the risk of default of the issuer of the mutual funds. Overall, the credit ratings provided to the mutual funds help the investors to invest their funds smartly. CRISIL ranking scales used by the CRISIL Company ranges from 1 to 5. The top 10 percentile of funds is ranked as CRISIL Fund Rank 1 indicating ‘very good performance’ of mutual funds.
  • CRISIL ULIP Rating: CRISIL ULIP ( Unit Linked Insurance Plans) ratings provided by CRISIL company benchmarks various ULIP to facilitate investors in evaluating plans and decision making. Unit linked Insurance plans are insurance plans which integrate the insurance and investments under the single-integrated plan. The CRISIL ULIP ratings, provided to Unit linked insurance plans are based on two factors- cost and portfolio performance. While the cost factor focuses its attention on the costs and charges while offering the product, the portfolio performance is evaluated using the returns on the investments in the past 5 years.

What is the role of CRISIL ratings?

CRISIL ratings help the investors and borrowers to make smarter financial decisions by analysing the creditworthiness of debt instruments and financial instruments.

Role of CRISIL ratings for issuers and borrowers: Borrowers and issuers can use the CRISIL ratings to ease their access to various alternative options and also optimise the cost of funds of different debt instruments of the financial institutions.

How do CRISIL Rating affect Depositors?

CRISIL credit ratings provided by CRISIL assess the creditworthiness of any financial institution. Before making any decision about investment in any institutions, you can make an internal evaluation of various institutions. For instance, if you have decided to invest in fixed deposits, the criteria to choose about the lending institution would be a higher rate of interest along with the attractive returns. However, these investment instruments are subject to market risks and not backed by the government. It is thus essential that the creditworthiness or CRISIL rating of the instruments and financial institutions is determined before making any decision. Also, you can know about the attractive offers of the different players in the market using these credit ratings.

FAQs

What does CRISIL rating mean?

CRISIL ratings provided by global agency CRISIL represents the creditworthiness of debt instruments and financial institutions. These credit ratings help the borrowers and investors to access the right financier which has the least credit risk of turning into default.

How does CRISIL rate a company?

CRISIL ranking is calculated based on the degree of strength of the company concerning honouring debt obligations. The ratings are based on parameters such as the business strengths, its market share and portfolio performance. A 'CCR AAA' indicates the highest strength of a company with the lowest risk of turning to defaults.

What does the FAAA rating mean?

FAAA in CRISIL rating means that the fixed deposits are of the highest safety and there is the lowest risk of default.

Is Crisil Rating reliable?

Yes, these ratings are provided by the credible global analytical agency, Credit Rating Information Services of India Limited by analysing various debt instruments and financial institutions.

How do I find my CRISIL rating?

You can find the CRISIL rating of any debt instrument or financial instrument on the official website of CRISIL.


FD News - Sep 2020
  • 2020-09-17 : ICICI Bank changed its Fixed deposit rates
    ICICI Bank changed its FD rates effective from 11 September 2020. The FD rate for 7 to 29 days is 2.50%, the rate for 30 to 90 days is 3%, and it stands at 3.50% for 91 to 120 days. Further, the fixed deposit rate for 121 to 184 days is 3.50%, for 185 to less than 1 year it is 4.40% and for 1 year to less than 18 months it is 5%. The rate for 18 months to two years is 5.10%, and for 2 years 1 day to 3 years is 5.15%. The rate for 3 year one day to 5 years is 5.35% and it stands at5.50% for 5 years one day to 10 years.
  • 2020-09-17 : Punjab National Bank changed FD rates
    Punjab National Bank revised its FD rates effective from 1 September 2020. The FD rates for 7 to 45 days is 3%, for 46 to 90 days it is 3.25 and for 91 to 270 days it is 4.40%. The rate for long tenors of 271 days to less than one year is 4.50% and the rate for one year to up to 3 years is 5.25%. Further, the FD rate for above 3 years to 10 years is 5.30%.
  • 2020-09-17 : SBI changed its Fixed deposit rates
    State Bank of India changed its fixed deposit rate. The FD rate for 7 to 45 days is 2.90%, it is 3.90% for 46 to 179 days and 4.40% for 180 days to 1 year. Further, the fixed deposit rate for one year to less than three years is 5.10%, and for three years to less than five years it is 5.30%. The rate for 5 years upto ten years is 5.40%. The revised rates will be effective from 10 September 2020.
  • 2020-09-15 : SBI special FD scheme for senior citizens extended till December 31
    SBI special fixed deposit scheme for senior citizens has been extended. The scheme was launched to provide a higher interest rate to senior citizens in the current falling interest rate scenario. The special FD scheme for senior citizens will be available till year December 31.
  • 2020-08-27 : HDFC Bank revised its FD rates
    With effect from 25 August 2020, HDFC Bank revised its FD rates. The FD rates for 7 to 29 days is 2.50%, and it is 3% for 30 to 90 days. The fixed deposit rates for 91 days to six months is 3.50%, for six months one day to one year is 4.40%. Further, the FD rate for one year one day to two years is 5.10%, and it is 5.15% for two years one day to three years. FD rates for three years one day to ten years stands at 5.30%.
*Terms and conditions apply. Credit at sole discretion of lender subject to credit appraisal, eligibility check, rates, charges and terms. Information displayed is indicative and from collected from public sources. Read More