It is placement season once again and newspapers talk about the usual suspects hiring in large numbers from colleges.
However, quite a few of you are tired of the generic careers that get foisted on the unsuspecting among us. In today’s column, let us explore an interesting and impactful career for those of you wanting to blaze a trail. Let us talk about the career options open to you as a credit analyst.
I can see the questions coming from you thick and fast — Who is a credit analyst and what does he/she do? Why is that an impactful role?
Credit influencer
A couple of months back, we learnt about the IL&FS fiasco. IL&FS had cooked their books and defaulted on the interest and principal repayments on some of their borrowings.
But how were they lent such large sums of money in the first place? You see, without a process in place, lending and investment decisions cannot be successfully carried out in a financial services company.
Say, you are an institutional lender such as SBI or an investor like ICICI Prudential mutual fund. Such institutions have systems and processes in place to make sure that mistakes do not happen. Even so, every now and then we have rogue cases like the IL& FS. For now, let us just focus on the process.
There are organisations called credit rating agencies, which as their name suggests “rate” the credit worthiness of the corporate borrowers.
So, if you are a corporate borrower, it is in your interest to get yourself rated (more specifically, the debt securities that you issue).
This is like a third party expressing an opinion on the credit worthiness of a borrower. In theory, the rating process is supposed to be methodical and transparent. In such a scenario, it makes life a lot easier for the borrowers and the lenders.
The rating opinion by the rating agencies heavily influence the rate of interest that is charged for a borrower and more importantly whether he gets to borrow at all in the first place.
The rating agencies employ “credit analysts” whose job it is to analyse the industry developments of the borrower, study the financial statements of the borrower and ultimately give out a rating opinion to the rating committee which approves or rejects the rating opinion.
Such work is highly analytical in nature and is ideal for folks who are interested in how businesses work along with a flair for financial accounting and general numeracy. This is a solid intellectual career for engineers with MBA or chartered accountants. It is a highly responsible job with numerous career paths if you are really good.
Some of the top rating agencies in India are CRISIL, ICRA and CARE.
So, if you are someone comfortable with numbers and are looking for a meaningful career then this is an interesting choice to explore.
The writer is an alumnus of IIM Bangalore and co-founder, Money Wizards. chari.venkatesh@gmail.com
