The Indian unit of credit standing company Moody’s, ICRA, stated on Wednesday that almost 100 corporations with debt totalling 350 billion rupees ($4.40 billion) are more likely to be downgraded after the central financial institution tightened ranking methodologies.
The corporations more likely to be affected are largely within the energy, healthcare, engineering, development and roads sectors.
“Our assessment suggests that if the credit profile of these entities does not undergo any change … there could be an average impact of around two notches to the existing ratings,” stated Jitin Makkar, senior VP, Icra.
As a consequence, Indian banks might must put aside a further 4 billion rupees given the upper capital requirement for lower-rated corporations, ICRA stated.
The Reserve Bank of India issued new tips in April, noting that there was a large variation within the analysis mechanism and methodologies adopted by completely different credit standing businesses.
Under the modifications, the ranking businesses can solely think about an specific assure by a 3rd occasion for an organization’s debt, whereas different extensively accepted types of help corresponding to letters of help or pledged shares will now not be thought of.
Source: auto.economictimes.indiatimes.com