How Does ICRA Rating Affect Fixed Deposit?


The first step to invest money is to determine the risk associated with the investment tool you choose. There are high-risk investment tools, and there are low-risk investment options. Depending on your risk appetite, you need to choose an investment option as per your convenience. Some of the high-risk investment options are mutual funds, bonds, debts, etc. Some of the low-risk investment options are Fixed Deposit (FD), Pension Plans, Provident Fund, etc. 
Although high-risk investment plans could give higher returns, their volatile nature can result in losing all the money invested. Among the low-risk investments, FD is one of the most dependable investment option providing guaranteed stable returns. 
Due to the defaults committed by the initial financial providers in repaying the promised sum, credit rating companies like CRISIL (Credit Rating Information Services of India Limited), ICRA (Investment Information and Credit Rating Agency), and CARE (Credit Analysis and Research), initiated in rating the financial companies offering Fixed Deposits.    
What is the Role of ICRA in Financial Services?
ICRA (Investment Information and Credit Rating Agency) Ratingis the symbolic representation of its opinion on the risks associated with the financial institution. These ratings are done to the financial service providers within the boundaries of India. The ratings reflect the probability and the intensity of the losses that could occur due to the financial provider’s default in repaying the invested money. ICRA also does corporate governance ratings apart from the performance rating, grading, and ranking to hospitals, construction companies, and mutual funds. 

Following are some of the benefits of ICRA rating:

     Reflects the ability of financial providers to meet their financial obligations to the customers.
     Helps the financier in the marketability of the services provided.
     Helps in offering the opportunity to the customers to make an unbiased decision on choosing the financial company.
     It works as a guide for individual investors or a group of investors.
     Helps the investors narrow down the options for reliable financiers.
     It enables transparency in the investment sector.
     It aids the financial provider to maintain a firm stand in the investment sector and stand out from the competitive companies.
What is the Procedure of Rating Adopted by ICRA?
     Below is the procedure of rating adopted by ICRA:
     The financier who wants to get rated approaches ICRA rating agency and submits a Rating Requisition Form (RRF).
     The company to be rated pays the charges for rating and signs the Rating Agreement (RA).
     The rated entity provides the needed information about them to the rating agency, and the analysts carry out the conflict check.
     The analysts visit the site if needed and as discussed by the entity to be rated.
     The analysts then make a report with the gathered information about the company.
     Along with the receipt of the RA, the rating report is presented to the Rating Committee (RC).
     The rating assigned by the RC along with the reasons for the same is intimated to the rating entity.
     If the rating entity accepts the assigned rating, the ratings are displayed on the website of ICRA and are monitored continuously by the agency until the entity withdraws its entry.
     If the rating entity denies the assigned rating, the entity can appeal against the rating agency. Within a month of the appeal, the unaccepted rating is published on the website of ICRA.
How Does ICRA Rating Affect Fixed Deposits?
With an unbiased credit rating by ICRA, you can determine the reliability of the financier. Leading financial companies like Bajaj Finance is accredited with MAAA high stable rating from ICRA as well as FAAA high rating from CRISIL. These high ratings indicate the high safety by investing and low risk of defaults. You can avail high interest rates (8.75% to 9.10%) by opening FD with Bajaj Finance with a quick online application procedure. Also, apart from the guaranteed returns, senior citizen applicants get a 0.35% increase in the FD interest rates.
How Does ICRA Rating Affect Fixed Deposit? How Does ICRA Rating Affect Fixed Deposit? Reviewed by Durgesh Thakur on February 15, 2019 Rating: 5

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