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Hidayatullah National Law University, Near Abhanpur, Uperwara Post, Raipur
Volume - 3,
Issue - 1,
Year - 2015
Credit rating is the rate of the rating company on the ability and finance position as well as history finance position to pay off the debts. Credit rating estimates all the finance position such as assets and liabilities, balance sheets, long terms assets and liabilities, debt-equity ratio and past of the company to pay the debts. With all these financial instruments, credit rating company gives the rating to the company of which it is rating and tell the investors as well as lenders about the financial position with its rating. Like normally credit rating gives company point 1 to 5 and 5 indicates that company has sound financially position whereas 1 indicates that company has poor financial position.
Credit Rating Agencies:
Credit Rating Agencies are essentially the corporations with specialized functions namely, assessment of the likelihood of the timely payments by an issuer on a financial obligation. In India the rating activities started with the incorporation of the Credit Rating Information Services of India Ltd. (CRISIL) in 1987 which commenced its operations of rating of companies in 1987-1988 and was promoted by Industrial Credit and Investment Corporation of India Ltd. (ICICI) and Unit Trust of India (UTI). The second rating agency Investment Information and Credit rating Agency of India Ltd. (ICRA) was incorporated in 1991 and was jointly sponsored by Industrial Finance Corporation of India (IFCI) and other financial institutions and banks.
Cite this article:
Anushree Modi. Credit Rating and IPO Grading – Concept, Purpose and Procedure. Int. J. Rev. & Res. Social Sci. 3(1): Jan. – Mar. 2015; Page 04-06.