These are the ratings from external agencies used by the Banks, Vendors, Financial Institutions, Investors and others to gauge the financial health of an Enterprise and its ability to make timely payment of its bank loan, including principal and interest payment. Agencies like CRISIL, ICRA, CARE, Brickworks and others have been authorised by the Government to rate the bank loan facilities enjoyed by businesses in India.
The rating exercise is carried out on the basis of the information provided by the company, in-house database and data from other reliable sources. The primary focus of the rating exercise is to assess future cash generation capability and their adequacy to meet debt obligations as per the repayment terms. The analysis therefore attempts to determine the fundamentals of the business and the industry and the probabilities of change in these fundamentals, which could affect the creditworthiness of the borrower.
Benefits
Risk-based pricing of bank loans – lower borrowing costs for higher rated entities
- Quicker processing of loans & enhancements
- Access to alternate avenues of funding
- Provide an independent view of the company’s strengths and weaknesses through a detailed credit rating report
- Enhance visibility for the corporate in the investment community
- Avoid penal interests on unrated bank loans