ICRAs

ICRAs is an acronym that stands for Investment Information and Credit Rating Agencies. It refers to a class of financial services firms that provide credit risk assessments and investment information. The term is most commonly associated with ICRA Limited in India, one of the leading credit rating agencies in that market, though the acronym can be used to describe similar agencies in other jurisdictions.

Functions of ICRAs include assigning credit ratings to debt issuances and to issuers such as corporations, financial institutions, and governments. They also publish research reports, credit analytics, and market commentary. Ratings and analysis produced by ICRAs help investors evaluate creditworthiness, influence borrowing costs, and assist regulators and market participants with risk assessment and decision making.

Rating processes typically combine qualitative and quantitative analysis. This may involve collecting financial data, evaluating business and financial risk, governance, industry conditions, and macro factors; applying a transparent rating scale; and convening rating committees. Ongoing surveillance ensures that ratings reflect current conditions, with actions and watch lists communicated to markets. Methodologies are usually disclosed and periodically reviewed to maintain consistency.

Regulation of ICRAs varies by country but generally includes registration or licensing, independence and conflict-of-interest requirements, governance standards, and disclosure obligations. In India, credit rating agencies operate under SEBI’s regulatory framework and related market oversight. Internationally, many ICRAs align with codes of conduct and oversight practices promoted by organizations like IOSCO.

Limitations of ICRAs include the fact that ratings are opinions, not guarantees, and can be affected by conflicts of interest or sudden changes in conditions. Ratings should be used as one of several tools in investment analysis, alongside due diligence and market judgment.