Incorporated in 1993, Credit Analysis and Research (CARE) is the second largest rating agency in India. LIC and CRISIL are its two large shareholders. The company specialises in high-margin rating business, which contributed more than 96 per cent to its revenues in FY18. Based on FY18 industry revenues, CARE had a market share of 31 per cent in the rating business.
ICRA was set up in 1991 as a joint venture between various Indian commercial banks, financial-services companies and international credit-rating agency Moody's Investors Services. It primarily operates in three segments: rating services (73 per cent of revenue), grading services (7 per cent) and industry research (20 per cent). In FY18, ICRA had a market share of 22 per cent in the rating business.
The recent IL&FS default has raised questions about the credibility of credit-rating agencies in India. Even a month before its default, credit-rating agencies had an investment-grade rating on IL&FS. Going ahead, Indian credit-rating agencies may have to go through increased scrutiny by the regulator, given their inability to quantify risk properly.