What you need to know about FDs and CRISIL ratings
There are so many ways to compare investment options to find one that’s right for you. It can become quite a daunting task when making a decision on which company or financial institution to opt for based on rates, service, transparent costs, eligibility criteria, etc. Trusting vast sums of your own hard-earning money to a bank or NBFC can make you uneasy and anxious. It is therefore paramount that you feel comfortable with whom you choose, and trust them to make your money grow. It is at times like these that CRISIL ratings prove extremely useful.
What is a CRISIL rating?
CRISIL, which used to be the Credit Rating Information Services of India Limited, is today the largest full service ratings agency in India and a pioneer in credit ratings in the country. It is tasked with rating a wide range of debt instruments, deposits, loans, asset back securities and many more. The agency serves a wide array of groups ranging from investors, lenders and regulators, to name a few.
CRISIL plays an invaluable role in assisting both borrowers and lenders by bridging the information gap between the two, thus allowing for a more transparent system. CRISIL ratings are also only limited to debt instruments only and therefore aren’t of use when assessing equity investments.
How does it affect me?
In terms of Fixed Deposits (FD) , CRISIL assigns a rating to those companies and banks that issue Fixed Deposits, which denote their credit worthiness. Thus its ratings provide investors with the confidence in terms of how safe and secure their funds are.
The table below denotes the various specific ratings given to a Fixed Deposit:
These ratings are considered a sign of a FD’s credibility, which is essential information for any investor. These are nothing short of a grading for how safe your invested funds would be. Therefore you should only opt for fixed deposits rated FAA and above if you are someone who is looking for the lowest risk possible. For those more willing to take on more risk, the CRISIL ratings can assist you here too.
What you will typically find is that issuers or lenders who have lower CRISIL ratings offer higher rates of interest due to the higher risk you are taking, which follows the basic rule of investing. The CRISIL rating is a key indicator, which tells you about the issuer’s repayment capacity based on their history, allowing you to make an informed decision about your investment.
Therefore knowing how CRISIL ratings function and how to assess them when comparing various fixed deposit options is essential knowledge. These ratings ensure that you have as much information as possible when deciding who to entrust your hard-earned savings.