Moody's ups ratings of SBI, HDFC Bank, EXIM India and IRFC

Moody's ups ratings of SBI, HDFC Bank, EXIM India and IRFC

Senior Bharatiya Janata Party leader Yashwant Sinha on Friday took a dig at the Narendra Modi government said that there should be a midnight ceremony in Parliament to celebrate Moody's upgrade of India's rating.

Along with the rating upgrade, the Moody's also changed the outlook for India's rating to stable from positive.

Union Finance Minister Arun Jaitley on Friday hailed Moody's move to upgrade India's credit rating from "Baa3" to "Baa2".

Stock, bond and rupee markets gave a thumbs up to the rating upgrade with the Sensex and Nifty ending with more than 0.5% gains.

USA credit rating agency Moody's on Friday upgraded India's sovereign rating to Baa2 from its lowest investment grade of Baa3 after 13 years.

"The decision to upgrade the ratings is underpinned by Moody's expectation that continued economic and institutional reforms will, over time, enhance India's high growth potential and its large and stable financing base for government debt, and will likely contribute to a gradual decline in the general government debt burden over the medium term", Moody's said in statement. "The reform program will thus complement the existing shock-absorbance capacity provided by India's strong growth potential and improving global competitiveness".

While upgrading the rating, Moody's cited reforms like the recently-introduced Goods and Services Tax (GST), improvements to the monetary policy framework, measures to clean up non-performing loans and efforts to bring more areas into the formal economy.

Yesterday, for the first time in last 14 years, they have upgraded India's credit rating, and this is indeed big news.

However, challenges with implementation of GST, ongoing weakness of private sector investment, slow progress with resolution of banking sector asset quality issues and lack of progress with land and labour reforms at the national level remain, it said.

Moody's said demonetisation and GST, along with other measures, will help reduce corruption, formalise economic activity, and improve tax collection and administration. HDFC Chairman Deepak Parekh said, "I've always felt India's rating was far below than what it should be".

This period has, moreover, seen the country grow from a barely $ 620 billion to a $ 2.3 trillion economy, with its official foreign exchange reserves, too, soaring from some $ 110 billion to nearly $ 400 billion.

"Longer term, India's growth potential is significantly higher than most other Baa-rated sovereigns", the agency said.

Listing out the achievements, the Finance Minister said that India has become the fastest economy among the emerging nations and the country is going through strong fundamental changes.

Over the last two years, India has been lobbying hard with Moody's for an upgrade.

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