Ratings for Corporate deposits
Non-banking financial companies (NBFCs) are among the most popular entities that offer corporate fixed deposits. Examples of such companies are LIC Home finance, HDFC ltd, Shriram Transport Finance etc.
Such companies are required to get their deposits rated for their credit-worthiness. That is, they need to get a ratings grade from a rating company such as CRISIL, ICRA, Fitch, CARE etc.
Different ratings companies follow different methodologies and ratings system to rate such deposits. For example, CRISIL issues ratings in this scale:
FAAA ("F Triple A") - Highest Safety - This rating indicates that the degree of safety regarding timely payment of interest and principal is very strong.
FAA ("F Double A") - High Safety - This rating indicates that the degree of safety regarding timely payment of interest and principal is strong. However, the relative degree of safety is not as high as for fixed deposits with 'FAAA' ratings.
FA - Adequate Safety - This rating indicates that the degree of safety regarding timely payment of interest and principal is satisfactory. Changes in circumstances can affect such issues more than those in the higher rated categories.
FB - Inadequate Safety - This rating indicates inadequate safety of timely payment of interest and principal. Such issues are less susceptible to default than fixed deposits rated below this category, but the uncertainties that the issuer faces could lead to inadequate capacity to make timely interest and principal payments.
FC - High Risk - This rating indicates that the degree of safety regarding timely payment of interest and principal is doubtful. Such issues have factors present that make them vulnerable to default; adverse business or economic conditions would lead to lack of ability or willingness to pay interest or principal.
FD - Default - This rating indicates that the fixed deposits are either in default or are expected to be in default upon maturity.
NM - Not Meaningful - Instruments rated 'NM' have factors present in them, which render the outstanding rating meaningless. These include reorganisation or liquidation of the issuer, and the obligation being under dispute in a court of law or before a statutory authority.
Source: http://www.crisil.com/ratings/credit-rating-scale.html
Similarly, other ratings companies have scales of ratings based on their qualitative and quantitative assessment of the credit-worthiness of the deposit issuer.
From an investor's perspective, it is important to stick to deposits that are either rated at the highest level or the second highest level. Anything below should be considered risky in this regard.
More websites and ratings information:
ICRA: http://www.icra.in/rating.aspx?ck=Al1zZU0jCxnnNzwL5uegv67fZ8F5ztzzFLEUcwT2dDMm7iS901190113LRe63W4Lw5/VKVh5AdsyRioaWofXFFSjD0s2aJPcE445KJwTPXuwedhifjCWdXMFDloZKICha8WBzYl
Fitch: http://www.fitchindia.com/ratings/ratingsOutHome1.jsp?page=1§or_code=CORPORATE