Credit Rating of Securities: A Study on Selected Indian Banks
Author : Dr. Somnath Das and Devmalya Khan
Abstract :
Indian Banks are playing vital role in the economic development of the country. Banks are integrating all the industries over the country by providing loans and advances. The banking industry helps in the formation of capital and provides short-term capital to the business and industries. Credit rating of Indian banks is very important to determine their ability to generate credit in future and to determine whether they were able or not to contribute to the economic progress of the country. In this studies the credit rating of 5 Indian banks for a period of 10 years were taken to determine the creditworthiness of the bank and analyze the trend. The different types of ratios like CASA ratio, Debt-equity ratio and ROCE, interest income to total assets, interest expenses to total asset and NPAs are tested with the help of regression equation to know the impact of these ratios on the credit rating of the securities. We found from the study that ROA, CAR, Interest expenses to total asset ratios, interest income to total asset ratios and net NPA ratios have significant impact on the credit rating of the securities of the bank.
Keywords :
Credit rating, securities, default risk.
