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Moody's upgrade will make foreign funds cheaper: SBI Chief Rajnish Kumar

Rajnish Kumar also expects the rating of SBI to go up reflecting the higher sovereign ratings.

Press Trust of India  |  Mumbai 

Rajnish Kumar, SBI chairman
Rajnish Kumar, SBI chairman

State Bank chairman has welcomed the first upgrade by Moody's in 13 years as a positive measure that will make foreign funds cheaper for both corporates as well as his bank.

Kumar described the move as a "re-affirmation of how the world views India, which has been long pending and a thumbs up to the various reform measures," and added as a result, "the cost of foreign borrowings will automatically come down, which in itself is a big benefit for the country."

Stating that the upgrade was "much expected", he said, "in fact, always the question was why the rating upgrade wasn't happening... it also shows the views on our economy and reforms are more positive outside than within the country."

Talking to the press on the sidelines of the two-day summit, hosted by for the first time in the lobby group's 34 year history here, he said he also expects the rating of to go up reflecting the higher

"was always constrained by the country rating. As and when the SBI's next review happens, we will also expect that State Bank gets a higher rating. Our review happened just recently where the ratings were reaffirmed. In my view, SBI's rating and that of the sovereign should not be different."

He further stated the rating upgrade "gives a thumbs up to the economic prudence and reforms that government has initiated. Some of these reforms are mind-boggling, which have brought some difficulties in the transition period, but ultimately, there is no gain without pain.

"And those pains are behind us now and it is time for some gains. These gains are real," Kumar said, adding banking reforms through recapitalisation and the and the rollout are the most notable reforms that enabled this upgrade.

From a foreign investors' perspective the upgrade will help "raise their investment limits because it all depends on the country rating, and sometimes, even if they desire to invest, they get constrained by the country rating," he said.

Earlier in the day, American rating agency Moody's raised sovereign rating of the country by a notch to with stable outlook. The news boosted the market that rallied over 1.3 per cent and lifted the Bankex up to 6 per cent.

Shares of surged 6 per cent, soared 5.17 per cent, gained 4.16 per cent, SBI (3.91 per cent) and (3.55 per cent) on BSE in the morning trade. While Axis Bank gained 2.64 per cent, went up by 1.18 per cent.

First Published: Fri, November 17 2017. 15:51 IST