EXPLAIN THE ROLE OF ICRA AND CRISIL IN CREDIT RATING
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Answer:
Some of the debt instruments rated by CRISIL include loans, commercial papers, non-convertible debentures, bank hybrid capital instruments, asset-backed securities, mortgage-backed securities, bonds, certificates of deposit, etc.
What is the role of CRISIL ratings?
CRISIL plays an essential role in helping borrowers or investors access loans or invest their money with credible financiers. Here’s a look at the role of CRISIL ratings:As one of the nation’s first credit rating agency, CRISIL’s analysis helps in forming an opinion on the risk types that affect the relative ability of financiers to service their interest payment obligations and principal repayments.CRISIL provides an unbiased, objective and independent opinion on the relative safety of the sum on a debt instrument.It helps the issuers enhance the marketability of the instrument, while also ensuring a firm financial standing at any given time.
What are the CRISIL rating criteria?
A financier’s asset quality is a measure of its ability to manage credit risks. It not only depends on the credit quality of its clients, but also on its ability to manage asset portfolio. Here’s a look at their rating criteria.CRISIL works towards managing and controlling credit and market risks at a portfolio level, and analyses the management’s attitude towards risk and growth. Hence, CRISIL’s ratings bridge the gap between the financier and the borrower or investors, enabling them to take the right decisions.These ratings act as an assurance that indicates the highest degree of safety for a fund. The ratings are made, based on information gathering, analysis and meetings with the Management.CRISIL’s credit ratings on debt obligations indicate the likelihood of the obligations being repaid in time; along with an opinion on the probability of default on the instruments. The ratings come in different categories for long-term, short-term, structured finance, corporate credit ratings, fixed deposit ratings, and financial strength ratings for insurance companies.
How CRISIL Ratings affect Depositors?
When it comes to investing in Fixed Deposits, we tend to look for lucrative options and high returns. This makes us gravitate towards financiers who offer higher interest rates. However, there is an additional risk, when it comes to investing in certain company deposits, due to lack of government backing.
Hence, depositors risk losing the money they invest. However, CRISIL Ratings can help you take the right decisions, as you can determine the rating quality and opt for the right financier. CRISIL ratings enable you to sieve through the seemingly attractive offers, available across different companies. You can use these ratings as a benchmark to make a comparative analysis amongst various players in the market.
Here’s a look at CRISIL’s rating system for Fixed Deposit ratings:
Rating Meaning
NM Not Meaningful
FD Default
FC High risk
FB Inadequate safety
FA Adequate safety
FAA High safety
FAAA Highest safetyThere is no direct impact of CRISIL ratings on the interest rates of a Company FD, but usually investors take their investment decisions, based on the credibility of any entity.
What are the CRISIL Ratings for Bajaj Finance Fixed Deposits?
Bajaj Finance Fixed Deposits have a FAAA/Stable rating from CRISIL, which indicates the highest safety and lowest investment risk. Bajaj Finance FDs also have a rating of MAAA (stable) from ICRA, which is another reason to invest in them.
What other benefits do Bajaj Finance Fixed Deposits offer?
In addition to high safety and credibility, you can also get these benefits with Bajaj Finance Fixed Deposits:Higher interest rates – Bajaj Finance has one of the highest interest rates in the market, which makes it one of the most preferred financier by investors. Senior citizens get an additional benefit of higher interest rates over and above the regular interest rates, so they can safeguard their life’s savings and gain from stable returns.Minimum deposit of Rs. 25,000 – With Bajaj Finance Fixed Deposits, you can start investing with just Rs. 25,000, so you can start investing any time, without having to wait and accumulate a larger corpus. Even with a smaller minimum deposit amount, you can earn better returns by laddering your investments.