Earn interest up to 8.10% p.a. by investing in a Bajaj Finance Fixed Deposit | Rated CRISIL AAA/ STABLE and [ICRA]AAA(stable)

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. 

What are ICRA Ratings?

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.  

Significance of ICRA Ratings

  • 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.

How Should ICRA Rating Affect Investors?

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.

1. ICRA’s Long-Term Rating Scale

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

2. ICRA’s Short-Term Rating Scale 

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.

ICRA Ratings for Our Partners

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

Bajaj Finance Limited

[ICRA]AAA 

2

PNB Housing Finance Limited

[ICRA]AA

3

Mahindra Finance Limited

[ICRA]AAA (SO)

Limitations of ICRA Ratings

ICRA ratings are simply the relative ranking of the investment’s credit risk. They have certain limitations like any other credit ratings. Some of them are:

 

  • Debt obligations rated with the highest degree of safety also have a certain degree of credit risk. A high ICRA fixed deposit rating does not mean that there is no risk involved. It means the credit risks associated with obligations will be much lower than the ones with lowest ICRA ratings.

  • Only the relative credit risks are conveyed in ICRA ratings. It means these ratings do not reflect the other investment risks that happen due to the changes in interest rates or liquidity which arise because of market conditions.

  • ICRA ratings are always changing and are not a clear indicator of any issuer’s credit quality. This quality is constantly changing as per market movements.

  • Even though ICRA tries to incorporate the factors that impact the issuers’ prospective credit quality during their analysis, real-world movements can differ from ICRA’s expectations, giving rise to inaccuracies. In such scenarios, the previously assigned ratings may need certain upward or downward revisions.

  • All ICRA ratings are subjected to regular monitoring or surveillance. So, users of ICRA ratings should regularly check the updates on the official website.

 

All ratings assigned by ICRA are given based on the sources of information that ICRA considers reliable. This is based on audited statements released by the issuer company, opinions of legal and other experts, etc.

 

Although ICRA does ensure that all such information is reliable, it does not guarantee anything. There are no direct implications of accuracy, timeliness, authenticity or completeness of any such information. Also, the ICRA ratings shall not be considered as a recommendation to buy, sell, or deal in the ICRA rated instruments.

 

FAQs about Fixed Deposit ICRA Rating

  • ✔️What is MAAA?

    ‘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.

  • ✔️What does the ICRA MAA+ rating mean?

    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.

  • ✔️Is ICRA a credit rating agency?

    Yes, ICRA is an Indian credit rating agency set up in 1991 by leading financial institutions, commercial banks, and financial services companies.

  • ✔️Why is ICRA rating important?

    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.  

  • ✔️What is an AAA-rated fixed deposit?

    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.