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Consider the following statements: 1. In India, credit rating agencies are regulated by Reserve Bank of India. 2. The rating agency popularly known as ICRA is a public limited company. 3. Brickwork Ratings is an Indian credit rating agency. Which of the statements given above are correct?

Consider the following statements: 1. In India, credit rating agencies are regulated by Reserve Bank of India. 2. The rating agency popularly known as ICRA is a public limited company. 3. Brickwork Ratings is an Indian credit rating agency. Which of the statements given above are correct? Correct Answer 2 and 3 only

The correct answer is 2 and 3 only.

Key Points

Credit Rating Agencies (CRA)

  • It analyzes a debtor’s ability to repay the debt and also rates its credit risk.
  • All the credit rating agencies in India are regulated by SEBI (Credit Rating Agencies) Regulations, 1999 of the Securities and Exchange Board of India Act, 1992. Hence, Statement 1 is not correct.
  • There are a total of six credit agencies in India viz, CRISIL, CARE, ICRA, SMREA, Brickwork Rating, and India Rating and Research Pvt. Ltd.
  • ICRA Limited It is a public limited company that was set up in 1991 in Gurugram. Hence, Statement 2 is correct.
  • The company was formerly known as Investment Information and Credit Rating Agency of India Limited.

Brickwork Ratings

  • It is recognized as an external credit assessment agency (ECAI) by the Reserve Bank of India (RBI) to carry out credit ratings in India. Hence, Statement 3 is correct.
  • Brickwork Rating was established in 2007 and is promoted by Canara Bank. It offers ratings for bank loans, SMEs, corporate governance ratings, municipal corporations, capital market instruments, and financial institutions.

Related Questions

What is/are the following differences between private and public limited companies?
1. In a private limited company there is restriction on the number of members, where as no such restriction is applicable on a public limited company.
2. A private limited company can be listed on a stock exchange, where as a public limited company is always listed on a stock exchange.
3. A private limited company cannot issue debentures, whereas a public limited company can issue debentures.
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2. CRISIL is the largest credit rating agency in India but is not among the largest three in the world.
3. The three largest credit rating agencies in the world are Moody's, Standard and Poor's and Fitch.
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Statements : Although we have rating agencies like Crisil, ICRA, there is demand to have a separate rating agency for IT companies to protect investors.

Conclusions :
I. Assessment of financial worth of IT companies calls for separate set of skills, insight and competencies.
II. Now the investors investing in IT companies will get protection of their investment.
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