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ICRA Rating

ICRA Credit Rating Overview

Last Updated 23rd Sep 2020

ICRA is an independent credit agency comprising leading commercial banks, financial institutions and financial services companies which evaluates the relative credit risks associated with the debt instruments and institutions.

ICRA Full Form Investment Information and Credit Rating Agency
ICRA Rating Beneficiaries Investors, Issuers, Intermediaries, Regulators
ICRA Rating Parameter Relative credit risks
ICRA Highest Rating Scale AAA

What are ICRA ratings?

Before taking any decision about investment you need to determine the amount of risks associated with the debt instruments and issuers to calculate the returns on the investment or to avoid any losses from the investments. The credit ratings thus quantified the creditworthiness of the borrower for a debt instrument or institutions.

One of the agencies which provide credit ratings is ICRA. ICRA or Information Credit Rating Agency ratings provide opinion on the relative credit risks of debt obligations across India. The agency was established in 1991 by leading financiers such as commercial banks, financial institutions and financial services companies and provides ratings by examining the weakness and strengths using factors such as cash flow and liquidity, hedging of risks, marketing strategies, past record of debt servicing and financial flexibility etc.

What is the role of ICRA ratings?

ICRA credit ratings assess the relative credit risks of debt securities of different institutions to calculate the risks and safety regarding timely servicing of financial obligations. These ratings provide information to various stakeholders such as Investors, Issuers, Intermediaries, Regulators to access the financial market safely and take a smart decision. The quantified ratings also make the money and capital market more organised and transparent. Moreover, intermediaries can improve efficiency in raising funds with the help of ICRA ratings.

The beneficiaries of ICRA credit rating are listed as below:

  • Investors: ICRA rating provides a relative ranking of a default loss probability of the investment in comparison with other instruments. This rating helps investors to know about the credit quality of the instrument. Thus investors can analyse the risks associated with the investment instruments.
  • Issuers: The ratings provided by ICRA limited helps to calculate the risk of investments to determine the returns on investments. The issuers can use the ICRA ratings for determining the price of investments based on the risks associated with their debt instruments.
  • Intermediaries: The ICRA rating helps the intermediaries such as investment and merchant bankers for pricing, in placement and marketing the issues.
  • Regulators: ICRA limited ratings help the regulators to provide benchmarks and rules for various market intermediaries and financial intuitions.

Rating criteria for ICRA

ICRA India provides credit rating for different debt instruments and institutions based on the following categorisation:

  • ICRA credit ratings for long term securities: Debt instruments such as bonds, NCD with maturity period exceeding one year falls under this category. However, public deposits are excluded from this list. ICRA credit ratings for long term securities range from [ICRA]AAA to [ICRA]D, where [ICRA]AAA is the highest credit rating and it denotes that there is the highest degree of safety regarding timely servicing of these instruments and [ICRA]D denotes default or risk of defaults on the instruments.
  • ICRA credit ratings for medium-term securities: All public deposit programmes are provided credit ratings under this category. ICRA credit ratings for medium-term securities range from MAAA to MD, where MAAA is the highest credit rating and it denotes that there is highest degree of safety regarding timely servicing of these instruments and MD, denotes default or risk of defaults on the instruments.
  • ICRA credit ratings for short-term securities: The debt instruments within one year of original maturity period are rated based on the short-term rating scale. There are four credit scales namely; [ICRA]A1, [ICRA]A2, [ICRA]A4 and [ICRA]D. [ICRA]A1 denotes highest degree of safety and [ICRA]D denotes instruments are in default or expected to be in default on maturity.

Here is an ICRA rating list for the long term, medium-term and short term instruments:

ICRA Rating Meaning Long term instruments Medium-term investments Short term investments
AAA The highest degree of safety [ICRA]AAA MAAA [ICRA]A1
AA The high degree of safety [ICRA]AA MAA [ICRA]A2
A An adequate degree of safety [ICRA]A MA -
BBB Moderate degree of safety [ICRA]BBB - [ICRA]A4
BB Moderate risk of default [ICRA]BB - -
B High risk of default [ICRA]B MB -
C Very high risk of default [ICRA]C MC -
D In default [ICRA]D MD [ICRA]D

How ICRA Ratings affect Depositors?

Depositors can keep track of ICRA ratings to evaluate the safety of various financiers. While investing in schemes like fixed deposit ensures you a fixed rate of return on your investments, calculating the safety of these instruments can help you to get timely returns on your investments as well.

ICRA rating list for Fixed Deposits

ICRA Rating Meaning
MAAA Highest credit quality
MAA High credit quality
MA Adequate credit quality
MB Inadequate credit quality
MC Risk prone credit quality
MD Lowest credit quality

FAQs

What does AA rating mean?

ICRA rating AA denotes that instruments have a very high degree of safety. These instruments carry low credit risk. For long term security, AA rating is represented by [ICRA]AA credit rating, for medium-term security it is represented by MAA and for short-term securities the credit rating is [ICRA]A1.

Is BBB better than BB?

ICRA credit rating BBB denotes that there is a moderate risk of safety regarding timely servicing of financial obligations and is better than credit rating BB as credit rating BB denotes that there is a risk of default on instruments moderately.

What is MAAA?

MAAA is the highest credit rating scale of ICRA India for medium-term investment instruments. Under medium-term instruments, the credit ratings are provided for all public deposit programmes.

What is the full form of ICRA?

ICRA stands for Investment information and credit rating agency. It is an independent credit agency comprising leading commercial banks, financial institutions and financial services companies which evaluates the relative credit risks associated with the debt instruments and institutions.

What is a BBB minus rating?

BBB minus is a credit rating one notch lower than BBB and indicates a moderate degree of safety. It means that the debt instruments or companies carry moderate risks regarding timely servicing of financial obligations.


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