Moody’s to pick up 11.36% stake in ICRA for Rs 100 cr

MUMBAI, Aug 2: "Once the deal is through, Moody's would conduct regular training and business seminars for ICRA analysts on concepts...

MUMBAI, Aug 2: "Once the deal is through, Moody’s would conduct regular training and business seminars for ICRA analysts on concepts and issues related to the development of capital markets in India, Moody’s president John Rutherford told reporters here on the eve of signing ceremony in New Delhi tomorrow.

The latest decision by Moody’s is a consequence to the tie-up between it and ICRA last December to work in tandem on rating systems in India. ICRA managing director P K Chaudhary did not rule out the company going public in future and said if the company’s capital appreciation improved down the line, such a move could be contemplated.

Moody’s refusal to change India’s sovereign rating, Rutherford said a slight increase in gross domestic product (GDP) growth over the year in a country will not help improve its standing among other countries. "There are other sectors where India had to improve its performance. One of these is the banking sector which needed much improvement," he said.

A lot of changes would have to be brought in, in the Indian banking system, to show improvement in the sector. The inefficiency of the Indian banks was still a major factor impeding the progress of the country, Rutherford said.

He said the interest rates offered by the banks had to be further brought down following the decline of annual rate of inflation to its lowest levels in two decades.

He said deterioration in banks asset quality was a direct consequence of sluggish demand in many priority sectors, where bank lending traditionally had been concentrated.

The macro-economic policy environment has become more supportive of growth in the current fiscal year, the Moody’s official said but added that a lot had to happen before the rating agency revised its posture. Moody’s had downgraded India’s sovereign rating to "BA2" following the Pokhran nuclear explosions in May last year.