Credit rating agencies are mainly regulated by SEBI and RBI policies. In fact, SEBI through the Securities and Exchange Board of India (Credit Rating Agencies) Regulations, in 1999, was one of the first regulators globally to devise an effective and comprehensive regulatory framework for credit rating agencies. SEBI regulation for credit rating agencies has been designed to ensure the following: - Only credible actors enter and exist in the business - Regulations are designed in such a way that CRAs provide fair and objective opinions - Investors have broad access ai ratings-The applicant must be registered as a company under the Companies Act, 1956 and possess a minimum net of Rs.5 crore. Furthermore, the International Organization of Securities Commissions (IOSCO) has suggested some changes in its code of conduct to increase the credibility of CRAs. The proposals, once implemented, will need to be adopted by all national regulatory authorities. The proposed changes include strengthening provisions aimed at safeguarding the integrity of the credit rating process in order to avoid conflicts of interest and increase transparency while at the same time safeguarding public information. (Source: The Economic Times, February 10, 2014) Market Performance Crisil was the first credit rating agency to open an office in India in 1987. At that time the industry was at a nascent stage and faced several obstacles to causes the following problems: Absence of bond market - Absence of market-determined interest rates. However, the liberalization of the Indian economy has helped the growth of the sector due to the rapid economic growth in the country which has pushed both private and government enterprises to look to the capital market for financing options. The sector receives...... half of the paper...... resources as well as having sophisticated analytical methods and structures. However, the growth of the sector largely depends on how the corporate debt and derivatives market expands in India. This would require capital account liberalization and deregulation to increase demand for debt instruments not only in domestic markets but also in international markets. India is also facing pressure from international circles in this regard, so far the regulators have taken a cautious line as this would cause disturbances and fluctuations in the domestic market. However, the future is not entirely bleak for this sector. The credit rating industry in India has huge growth potential due to the following factors: - Strong investment cycle in the Indian economy - Lower penetration due to corporate bond market - Regulatory push due to implementation of Basel II norms