New Delhi, June 3 -- Investments have multiple types of risk. Equity investments typically carry volatility risk. Debt or bond investments are relatively stable but come with default or credit risk. Today, we will discuss the evolving scenario for credit risk.

Credit rating companies publish a metric called credit rating ratio or simply credit ratio. It is the ratio of the number of entities that were upgraded to those that were downgraded in a period of six months or one year. If 100 entities were upgraded and 100 were downgraded, the ratio is 1. Hence 1 is the "par" number and anything more than 1 is positive.

For Crisil, the credit ratio was 2.64 in the second half of FY25 (October 2024 to March 2025). Crisil upgraded 423 entities an...