Moody's upgrades short-term ceiling on foreign currency

The Union finance ministry on Tuesday said Moody’s Investor Services had, in addition to the three upgrades on December 20 last year, upgraded India’s short-term country ceiling on foreign currency bank deposits.

“There has been another upgrade by Moody’s, with the short-term country ceiling on foreign currency bank deposits going up from NP (not prime) to P-3 (prime: acceptable ability to repay short-term obligations),” said joint secretary, capital markets, Thomas Mathew.

Mathew added the upgrade indicated, “you could see entry of capital into this segment also”.

The short-term debt of commercial banks stood at Rs 3,732 crore as on September 2011. It was Rs 4,554 crore at the end of September 2010.

On December 20, Moody’s had upgraded the ratings on long-term and short-term government bonds denominated in the domestic currency and the long-term country ceiling on the foreign currency bank deposits to investment grade from speculative.

Moody’s had underlined the government’s efforts at fiscal consolidation.

The upgrade followed a positive rating action by Dominion Bond rating Services (DBRS). They upgraded the trend of India’s long-term foreign and local currency debt rating from a negative to stable outlook in June 2011.

In the same month, Fitch had also appreciated the management of India’s economy by India and had affirmed the ratings issued in the previous year.

Fitch and Standard & Poor’s are slated to visit India between March and May, after presentation of the Union Budget for 2012, said officials.