Higher growth in the earlier period was more due to increasing penetration. Since BASEL II norms were implemented, more and more companies were going for rating gradually, which led to very high growth. Proportion of new business as compared to surveillance business was higher that time. Now, majority of companies, which had to be rated, are already rated. Also, jumping from one rating agency to other has become cumbersome (more for NCD issuers) due to change in SEBI regulations few years ago, which has marginally reduced new business opportunity for all rating agencies.
While credit growth does lead to rating business growth, the same can not be similar, due to pricing cap and fee negotiation with increased quantum of debt. In my view, future growth in rating business will be lower than credit growth. CRISIL was visionary to understand this much earlier and aggressively expanded other business areas. CARE has been trying to do so for many years, but no success so far.
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