Moodys Team To Visit India To Review Ratings

The US rating agency, Moodys Investor Service team will visit India in the first week of February to meet the leading banks, financial institutions, top companies, regulatory authorities and the government, to review the rating of India.

Sources point out that the final decision on the rating will be announced only after the results of the general elections even though the review excerise will be over much earlier.

This is so the the outcome of the polls will have a bearing in the rating. In case of a minority government the rating will be adverse.

The visit to India is pertaining to rating agencys recently decision of putting Indias sovereign rating and rating of several corporates on a review for a possible downgrade which currently stand at Baa3, indicating investment grade.

 

The rating agency has stated that the rationale for placing India under a rating watch is the diminishing reform impetus in India, worsening of the countrys public sector debt and current account deficit and Indias poor export performance.

Interestingly, in a letter to banks and FIs, Moodys have stated that in context of the recent debacle in the South East Asian Countries the rating agency has decided to review its current rating to India.

Sources pointed out that Moodys are expected to visit India for a duration of three weeks and complete the exercise before Lok Sabha elections which are scheduled on February 22 to March 6.

The rating agency is expected to review the performance of the leading banks and FI which include State Bank of India, Bank of Baroda, Bank of India, Canara Bank, Central Bank of India, Oriental Bank of Commerce, Punjab National Bank, Union Bank of India, Industrial Development Bank of India, Industrial Credit and Investment Corporation of India, Industrial Finance Corporation of India and Power Finance Corporation. Among the top corporates that are expected to be reviewed by Moodys during their visit include Reliance Industries Tata Engineer and Locomotive Company and Tata Electric Corporation.

Sources said that Moodys is expected to complete their exercise of reviewing the performance of leading banks, FI and corporates and also have discussions with the finance ministry, Reserve Bank of India and the government during its visit to India.

However, the decision of revising the rating will only be taken after the poll results are declared as it will give a clear view of the Indias future economic policies.

Banks are expected to make a presentation to Moodys on financial performance, asset liability mismatch, non performing asset, risk factors related to the bank and so on which will be followed by a discussion with the top officials of the bank.

Final results to be announced only after the results of the Lok Sabha election are announced