Pooja Patil* (Assistant Professor, Dr. D. Y. Patil B-School, Pune, Maharashtra, India),Amol Gawande (Professor, Global Business School and Research Centre, Pune, Maharashtra, India) and Priya Chaudhary (Student, Dr. D. Y. Patil B-School, Pune, Maharashtra, India), *Corresponding author's Email
Patil, Pooja, Gawande, Amol and Chaudhary, Priya (2019), “Issues with Credit Rating: A Literature Review”, MERC Global’s International Journal of Management, Vol. 7, Special Issue 2, pp. 01-06.
Submitted: April 01, 2019, Revision received: April 16, 2019, Accepted: April 30, 2019
The surge in Indian corporate debt default has been a debated issue of discussion among finance professionals. The discussion sparked off in 2019 when, SEBI, for the first time ever, slapped a fine of Rs.25 lakh each on three of India's leading credit rating agencies, specifically, India Ratings Research Private Limited, CARE, and ICRA (SEBI, 2019). Debt instruments with famous names like Amtek Auto, Essel, Reliance Com, Dewan Housing Finance, JP Morgan Debt Fund, and IF&LS have defaulted lately, shaking the security market's confidence deeply. The defaults occurred notwithstanding solid ratings from the main credit rating agencies. This paper reviews recent literature on credit rating issues in the backdrop of the disturbing events. The review states that credit rating has an important role to play in regulating the capital markets. However, the literature is by and large silent on the fraudulent practices by the agencies that have led to the loss of confidence of the investors.
Credit rating, Bonds, Literature review.
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