UPSC Prelims 2022 Q63: Indian Economy – Financial Markets & Capital Markets
Consider the following statements:
1. In India, credit rating agencies are regulated by Reserve Bank of India.
2. The rating agency popularly known as ICRA is a public limited company.
3. Brickwork Ratings is an Indian credit rating agency.
Which of the statements given above are correct?
- (a) 1 and 2 only
- (b) 2 and 3 only
- (c) 1 and 3 only
- (d) 1, 2 and 3
Answer: (b) 2 and 3 only
Explanation
Credit rating agencies in India
| Statement | Verdict | Fact |
|---|---|---|
| 1. CRAs are regulated by the RBI | Incorrect | CRAs are regulated by SEBI under the SEBI (Credit Rating Agencies) Regulations, 1999 |
| 2. ICRA is a public limited company | Correct | ICRA Limited is a public limited company, listed on the stock exchanges |
| 3. Brickwork Ratings is an Indian CRA | Correct | Bengaluru-based; SEBI cancelled its licence in 2022 |
SEBI-registered CRAs:
| Agency | Note |
|---|---|
| CRISIL | Majority owned by S&P Global |
| ICRA | Majority owned by Moody's |
| CARE Ratings | Indian; promoted by IDBI and others |
| India Ratings | Fitch group |
Answer: (b) 2 and 3 only.
Why each option is right or wrong
- (a) Incorrect. Statement 1 is wrong; SEBI, not the RBI, regulates credit rating agencies.
- (b) CORRECT. ICRA is a listed public limited company and Brickwork is an Indian CRA.
- (c) Incorrect. It keeps the false claim that the RBI regulates CRAs.
- (d) Incorrect. CRAs come under SEBI's 1999 regulations, so statement 1 fails.
Key point
CRAs are regulated by SEBI (1999 regulations); ICRA is a listed public limited company; Brickwork is an Indian CRA.
Remember
Rating agencies answer to SEBI, not the RBI.
Common mistakes
- Assuming the RBI regulates every credit-related institution.
- Not knowing ICRA is listed and majority owned by Moody's.
- Thinking Brickwork is foreign; it is Bengaluru-based.
Exam tip
Rule of thumb: anything about securities and ratings → SEBI; banks and NBFCs → RBI.
Sources
- SEBI (Credit Rating Agencies) Regulations, 1999
- ICRA Limited — Corporate information