Banks/NBFCs/FIs

CRAF rates debt instruments/ bank facilities of a large number of companies in the financial sector, including banks, non-banking finance companies, housing finance companies, financial institutions etc. Rating determination is a matter of experienced and holistic judgement, based on the relevant quantitative and qualitative factors affecting the credit quality of the issuer. The analytical framework of CRAF’s rating methodology is divided into two interdependent segments- The first deals with the operational characteristics and the second with the financial characteristics. Besides quantitative factors, qualitative aspects like an assessment of management capabilities play a very important role in arriving at the rating for an instrument. The relative importance of qualitative and quantitative components of the analysis varies with the type of issuer. CRAF largely uses the ‘CRAMELS’ model to assess entities in the financial sector; essentially covering Capital adequacy, Resource raising ability, Asset quality, Management quality, Earnings quality, Liquidity and Systems. Apart from that, CRAF factors in the nuances of the industry in which the financial sector entity operates.

CRAF’s offerings for the financial sector include:

Debt Instrument ratings
Long-term instruments like
- Bonds (Lower Tier II bonds under Basel II, Upper Tier II bonds under Basel II, Tier I – Innovative Perpetual Debt Instruments under Basel II, Tier II Bonds under Basel III, Tier I bonds under Basel III)
- Non-Convertible Debentures (NCDs)
- Principal Protected Market Linked Debentures
- Subordinate Debt
- Perpetual Bonds
- Hybrid Instruments
- Preference Shares
Medium-Term instruments like
- Fixed Deposits (FDs)
Short-Term instruments like
- Money Market Instruments (MMIs), Commercial Papers (CPs) and Short-Term Debt Programs of NBFCs
- CDs of Banks
Bank Loan Ratings

Insurance Sector

CRAF’s Issuer Rating for Insurance sector companies is an opinion on a life or non-life insurance company’s business and financial strength and measures its ability to honor policy holders’ obligations and debt payments, if any, as per contractual commitments. The opinion about policy holders’ obligations is not specific to any insurance policy or contract.

The issuer rating assigned to an insurance company is not specific to any particular insurance policy or contract and does not address the suitability of terms of any individual policy or contracts. Additionally, the issuer rating neither considers deductibles, surrender or cancellation penalties nor does it account for likelihood of the use of a defense like fraud to deny claims. The rating also does not consider any limitation that the insurers might face in settling its foreign claims due to exchange control/sovereign restrictions that might be placed on foreign currency payments by the Government of Mauritius.

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