What Is CRISIL Rating And How Important Is It?

As an investor, you have to be sure where you are investing. Banks are the foremost investment destination because of the trust and assurance of the Central Bank of India, i.e., the RBI backing FDs and other small saving schemes. You are aware of the creditworthiness of a bank from its performance, the number of customers, branches, and spectrum of services.

Bank Fixed Deposits are also insured by Deposit Insurance and Credit Guarantee Corporation, which is a government entity and insures Rs. 1 lakh per customer. 

On the other hand, investments like Company Fixed Deposits are ranked by credit rating agencies like CRISIL and ICRA. There are different detailed parameters for CRISIL rating and ICRA rating but overall factors considered are–

1. The volatility of the investment
2. Creditworthiness and financial state of the issuing company
3. Repayment history of the instrument

Importance of the Rating

CRISIL works on a framework of 14-point rating scale and ranks are given from FAAA to FD. This rating scale is for FDs issued by only those lenders whose FDs which have a contracted maturity of more than a year.

The underlying framework for rating these FD is that CRISIL focuses on a direct linkage between the rating of an issued FD and the issuer’s own long-term credit rating. Thus, the agency believes that parameters which have a bearing on the company’s rating also affects the instruments issued by them. 

The following table shows how CRISIL’s rating can be read in tandem with the bank’s FD ratings and how you can compare while choosing the right company FD.

While comparing different instruments, you will see that an investment-grade issuer’s FD ratings are generally higher than its own long-term rating. As FDs have a scheme of different tenors, the risk spreads out easily between various maturities and reduces pressure on liquidity. Unlike this, issuers with low ratings will not have the benefit of a great rating for their FD schemes when compared to their own rating as the pressure to repay will be higher. 

While selecting a company FD always checks on this credit rating along with the returns for different instruments like Bank FDs and NCDs. You will get a clear indication of which is a better scheme and issuer. Comparing these parameters, Bajaj Finance FD has consistently stood out above its peers and has beaten bank FDs in the rate of interest. 

Bajaj Finance FD currently pays 8.6% for a cumulative FD of 3 years and starts its interest rates from 7.72% for a non-cumulative one. If you are a senior citizen, you can look forward to earning an 8.70% rate of interest. All these benefits come with a strong rating of FAAA/Stable rating by CRISIL and MAAA/stable rating by ICRA. 

You are not just assured of timely payments but high return on investment starting with 51% for a normal citizen and 54% if you are a senior citizen. With Bajaj Finance, you can also use an online FD calculator to show you the various maturities with tenors to help you choose the right FD.