can anybody tell me that what is the used of credit rating to a company, why it has been done
SUDHIR & PRADEEP JI (CA FINAL+LLB + DISA) (2299 Points)
13 April 2010can anybody tell me that what is the used of credit rating to a company, why it has been done
CS Jithesh (ACS,)
(COMPANY SECRETARY )
(485 Points)
Replied 14 April 2010
There are many uses of Credit Rating.
The main objective of credit rating is to rate the company as such so that teh SHareholders of the company will have a better understanding with regard to the class of company. The Rating is actually a yard stick for all interested parties like shareholders, creditors and othe rvarious intermediaries to know the standard of the company.
As per SEBI for listed companies it is mandatory.
The rating will also be doing to the securities of the company both equity as well as debt.
Even Unlisted and pricate companies will go fro rating as per the new RBI guidlines, those companies having a good rating will get credit facilities at concessional rate as compared to unrated companies.
The rating will get you know the total credit worthiness of teh company in all respect.
The main rating companies are CRISIL, ICRA, FItch India.
Once the rating is done the rating descripttion will provide in their respective website.
This is just an overall info regarding Rating.
With Best Regards
CS Jithesh
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