RBI Governor Meets Top Bosses Of Ratings Agencies Amid Their Warnings

Reserve Bank of India (RBI) governor Shaktikanta Das on Thursday met the highest executives of assorted credit score rankings businesses through video conferencing. The assembly comes after rankings businesses Moody’s and Standard and Poor’s (S&P) issued recent sovereign rankings for India. While Moody’s downgraded India’s ranking, S&P selected to keep up its stance. Both the businesses nonetheless, have flagged coronavirus-related considerations of their forecast. 

RBI Governor @DasShaktikanta meets MD & CEOs of Credit Rating Agencies over Video Conference #rbigovernor#rbitodayhttps://t.co/tFbVPfBURf

— ReserveBankOfIndia (@RBI) June 11, 2020

In a press observe launched by the RBI after the assembly, the central financial institution stated that Mr Das mentioned points associated to ranking businesses’ evaluation of macroeconomic state of affairs and outlook on numerous sectors, total monetary well being rated by the businesses, main elements affecting credit score rankings and methods to strengthen ranking processes.

The assembly was additionally attended by deputy governors and different senior officers of RBI, the observe acknowledged.

WHAT MOODY’S AND S&P SAID

On 1 June, Moody’s Investors Service downgraded India’s sovereign ranking, citing challenges in implementation of insurance policies to mitigate dangers of a sustained interval of low development and deteriorating fiscal place. Moody’s downgraded Government of India’s foreign-currency and local-currency long-term issuer ranking, and local-currency senior unsecured ranking to “Baa3” from “Baa2”, and short-term local-currency ranking to “P-3” from “P-2”

Then on June 10, S&P retained India’s sovereign ranking on the “BBB-” – the bottom investment-grade stage – with a steady outlook. It stated that the financial hit from the coronavirus pandemic will worsen the nation’s weak fiscal settings, nonetheless the steady outlook displays the expectation that the nation’s’ financial system will recuperate following the containment of the COVID-19 pandemic.

Experts recommend that there are a number of concerns that will emerge if the rankings businesses resolve to additional downgrade India’s standing, together with steepening of the bond yield curve and weakening of the rupee.