When looking to invest in a company fixed deposit, you must have noticed that these instruments have certain ratings denoted as ‘AAA’ or some even the words ‘AAA ICRA Fixed Deposit’. These ratings are assigned by specific agencies, and represent the overall standing of the FD. Simply put, it is the credit agency’s rating for the instrument based on its stability and credibility.
ICRA or Investment Information and Credit Rating Agency of India is a public company set up by leading financial institutions, commercial banks and financial services companies in 1991. The ICRA fixed deposit rating scale is one that it uses to determine credit risk.
ICRA ratings denote the degree of safety regarding timely servicing of financial obligations. ICRA provides ratings by examining factors such as cash flow, liquidity, financial flexibility, past record of debt servicing, hedging of risks, marketing strategies, etc. As such, the ICRA fixed deposit rating plays a vital role in identifying credible financiers.
It is a marker of the financier’s ability to make timely interest and principal payments to their investors. Naturally, the ICRA AAA rated companies for FD investments are some of the best to consider, as they have proven their stability.
But what does the ICRA fixed deposit rating mean, and what is the scale of ratings issued? For answers to these questions and more, read on.
ICRA ratings have a significant role in assessing the credit risks of debt securities. The assessment of different institutions helps understand the risk and safety of the issuer.
ICRA ratings help identify the issuers credibility and provide reliable service to investors, issuers, intermediaries and regulators.
ICRA credit ratings ensure transparency in the money and capital market and help bring about standardisation.
ICRA ratings give the investors a ranking of default loss probability of the investment instrument and helps them know all about its safety. This will help investors make informed decisions with objective data.
Intermediaries like investment bankers can use the ICRA ratings to set the price and marketing strategies, whereas regulators can use them to provide benchmarks and rules for the financial market.
To evaluate the safety of the financier, you need to keep track of rating by ICRA. Fixed deposit offerings by companies will have these ratings, and you should look for them, if not mentioned.
Deposit schemes like fixed deposits assure returns on investment and are relatively risk-free. However, before depositing in the FD category, you should check the ICRA fixed deposit rating. This helps assess the stability of the financial instrument and the chances of getting returns on time.
ICRA ratings are mainly given for long-term, medium-term and short-term investments. Here is a quick overview of these.
Long-term Investments - All Bonds, Non-convertible debentures, and other debt instruments other than Public Deposits with original maturity over one year comes under this category.
Short-term Investments - All financial instruments with original maturity within one year come under this category.
Rating |
Meaning |
Risk |
[ICRA]AAA |
Highest degree of safety |
Lowest credit risk |
[ICRA]AA |
High degree of safety |
Very low credit risk |
[ICRA]A |
Adequate degree of safety |
Low credit risk |
[ICRA]BBB |
Moderate degree of safety |
Moderate credit risk |
[ICRA]BB |
Moderate risk of default |
– |
[ICRA]B |
High risk of default |
– |
[ICRA]C |
Very high risk of default |
– |
[ICRA]D |
Defaulting or are expected to default soon |
– |
Rating |
Meaning |
Risk |
[ICRA]A1 |
Very strong degree of safety |
Lowest credit risk |
[ICRA]A2 |
Strong degree of safety |
low credit risk |
[ICRA]A3 |
Moderate degree of safety |
Higher credit risk |
[ICRA]A4 |
Minimal degree of safety |
Very high credit risk |
[ICRA]D |
Defaulting or expected to be in default on maturity |
- |
Let us check out the ICRA fixed deposit rating format here.
ICRA Rating For Companies |
Meaning |
AAA |
Highest credit quality |
AA |
High credit quality |
A |
Adequate credit quality |
BBB |
Moderate credit quality |
BB |
Average credit quality |
B |
Inadequate credit quality |
C |
Risk prone credit quality |
D |
Lowest credit quality |
For the rating categories, certain modifiers + (plus) or – (minus) may be added to the ratings. As an investor, you should know that these indicate a relative position of the rating in its category. For instance, an ‘AA+’ rating is higher than the ‘AA’ rating.
Based on this scale it is clear that the ICRA AAA rated companies for FD investments are the best choice. These are most trustworthy and have almost nil default risk. To know about some of the best ICRA AAA-rated companies for FD investments, read on.
While considering opening an FD, you should check out the ICRA fixed deposit ratings. Here are the ICRA ratings of our partners.
Sr. No. |
NBFC |
ICRA Fixed Deposit Rating |
1 |
[ICRA]AAA |
|
2 |
[ICRA]AA |
|
3 |
[ICRA]AAA (SO) |
|
4 |
YES Bank FD |
[ICRA]BB* |
‘MAAA’ was the highest ICRA fixed deposit rating assigned for medium-term investments. However, as of 16 July 2021, based on a circular issued by SEBI, ICRA has discontinued this rating scale, and migrated these ratings with the long-term scale.
The ICRA MAA rating was the second highest credit rating assigned by ICRA for medium-term investments. The deposits rated under this programme carried a low credit risk. The MAA+ rating was one notch higher than the ‘MAA’ rating.
Yes, ICRA is an Indian credit rating agency set up in 1991 by leading financial institutions, commercial banks, and financial services companies.
ICRA ratings have an important role as they indicate the credit risks of debt securities. The assessment of different institutions helps calculate the risk and safety of the financial obligations on time. These ratings help identify the financiers’ credibility and provide information to investors, issuers, intermediaries, and regulators.
As per the ICRA rating scale, an AAA-rated fixed deposit is one that is among the safest. You can expect timely servicing of any obligations from the issuer as there is minimal credit risk involved. As such, the ICRA AAA rated companies for FD offerings are some of the most secure options you will find.