When AAA Means B: The State of Credit Rating in India

Ragunathan V and Jayanth Varma

IIMA Working Papers from Indian Institute of Management Ahmedabad, Research and Publication Department

Abstract: As in many other countries, India five year old credit rating industry has grown rapidly amidst persistent doubts about the quality of the rating service. This paper evaluates the ratings given by India leading credit rating agency, CRISIL. We find that CRISIL ratings are not only too liberal by international standards but also internally inconsistent. We argue that to improve the quality of credit rating in India, there must be more competition; credit rating must be opened up to the private sector; and raters must provide unsolicited ratings.

Date: 1993-09-01
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