12.32          ndian      onom
     money multiPlier                                      creDit rAting
     At end March 2012, the money multiplier (ratio of     To assess the credit worthiness (credit record,
     M3 to M0) was 5.2, higher than end-March 2015,        integrity, capability) of a prospective (would be)
     due to cumulative 125 basis point reduction in        borrower to meet debt obligations is credit rating.
     CRR. During 2012–13, the money multiplier             Today it is done in the cases of individuals,
     generally stayed high reflecting again, the CRR       companies and even countries. There are some
     cuts. As on 31 December, 2014, the money              world-renowned agencies such as the Moody’s, S
     multiplier was 5.5 compared with 5.2 on the           & P. The concept was first introduced by John
     corresponding date of the previous year (Economic     Moody in the USA (1909). Usually equity share
     Survey 2014–15).                                      is not rated here. Primarily, ratings are an investor
     creDit counselling                                          Credit rating was introduced in India is 1988
     Advising borrowers to overcome their debt burden      by the ICICI and UTI, jointly. The major credit
     and improve money management skills is credit         rating agencies of India are:
     counselling. The first such well-known agency was           (i) CRISIL (Credit Rating Information of
     created in the USA when credit granters created                 India Ltd.) was jointly promoted by
     National Foundation for Credit Counselling                      ICICI and UTI with share capital coming
     (NFCC) in 1951.52                                               from SBI, LIC, United India Insurance
                                                                     Company Ltd. to rate debt instrument—
          India’s sovereign debt is usually rated by six
                                                                     debenture. In April 2005 its 51 per cent
     major sovereign credit rating agencies (SCRAs) of
                                                                     equity was acquired by the US credit
     the world which are :
                                                                     rating agency S & P—a McGraw Hill
           (i) Fitch Ratings,                                        Group of Companies.
         (ii) Moody’s Investors Service,                        (ii) ICRA (Investment Information and
        (iii) Standard and Poor’s (S&P),                             Credit Rating Agency of India Ltd.) was
        (iv) Dominion Bond Rating Service (DBRS),                    set up in 1991 by IFCI, LIC, SBI and
         (v) Japanese Credit Rating Agency (JCRA),                   select banks as well as financial institutions
                                                                     to rate debt instruments.
                                                               (iii) CARE (Credit Analyses and Research
        (vi) Rating and Investment Information Inc.,
                                                                     Ltd.) was set up in 1993 by IDBI, other
                Tokyo (R&I).
                                                                     financial institutions, nationalised banks
          As on 15 January, 2013 most of these rating                and private sector finance companies to
     agencies have put India under ‘stable’ category in              rate all types of debt instruments.
     foreign and local currencies barring Fitch and S&P
                                                               (iv) ONICRA (Onida Individual Credit
     which have put its foreign currency in ‘negative’
                                                                     Rating Agency of India Ltd.) was set
     category. The government is taking a number of                  up by ONIDA finance (a private sector
     steps to improve its interaction with the major                 finance company) in 1995 to rate credit-
     SCRAs so that they make informed decisions as                   worthiness of non-corporate consumers
     the Economic Survey 2012–13 says.                               and their debt instruments, i.e., credit
       52.    Y. V. Reddy, the RBI Gonvernor, The Economic           cards, hire-purchase, housing finance,
              Times, N. Delhi, 11 September, 2006.                   rental agreements and bank finance.