Login With Google
India may see fall in credit availability : Moody’s
Why is it in the news?
- According to Moody’s 2019 Global Emerging Market Outlook report, India faces a potential sharp slowdown in credit availability.
- The reason given is the possible credit squeeze that non-bank financial institutions face as the asset quality is stabilising.
More in the news
Findings of the Moody's report:
- Despite ample foreign exchange reserves buffer and greater resilience to economic shocks, India faces a potential sharp slowdown in credit availability.
- The recent default of IL&FS and the subsequent liquidity stress in the capital market, has created an emerging risk for banks in the country.
- The slower global growth, rising interest rates, trade protectionism and geopolitical tensions pose challenges for emerging markets in 2019.
- While Moody’s has forecast that the Indian economy will grow by 7.3% in 2019, it believes that delinquency rates in Indian asset-backed securities (ABS) backed by loans against property to small and medium enterprises will increase in 2019.
- This will be on account of rising interest rates and ongoing headwinds from the implementation of the GST outweighing the positive influence of robust growth.
Moody's
- Moody's is a global rating agency.
- Moody's Corporation is the holding company that owns:(1) Moody's Investor Services, which rates fixed income debt securities.(2) Moody's Analytics, which provides software and research for economic analysis and risk management.
- Moody's assigns ratings on the basis of assessed risk and the borrower's ability to make interest payments, and its ratings are closely watched by many investors.
- Moody's ratings go from AAA, which is the highest grade for the top quality issuer with the lowest risk down to C, which is usually given to securities that are in default with little chance of the principal being repaid.
Source
The Hindu.