The Hindu Business Line : ‘One third of ratings not made public’

Mumbai, Sept. 13 More than one-third of the ratings given by rating agencies in India are not made public as they are below investment grade, according to Mr D. R. Dogra, Executive Director, Care Ratings.

Since there is not much demand for BBB, BB or even A rated entities from investors in India, these rating do not come into public domain.

There has not been substantial penetration in terms of rating of small and medium enterprises in India, feel senior officials at rating agencies. Even among those rated, only AAA and AA ratings are made available in the public domain, said Mr Raman Uberoi, Senior Director-Ratings, Crisil.

Mr Uberoi said that while it is easy to float a ‘CCC’ rated paper abroad, there is hardly any market even for the A and BBB rated papers in India. But the situation is changing and the low rated instruments would also soon find a market, he felt.

“We recently assigned a corporate credit rating of ‘CCR BB+’ to Haryana Vidyut Prasaran Nigam Ltd. This is among the first non-investment grade ratings to have been accepted by an issuer and released in the Indian market. The release is an indication of the progressive deepening of the Indian debt market,” he said.

Mr V Leeladhar, Deputy Governor, Reserve Bank of India said at a seminar on Thursday, “The rating penetration in India is very low. Moreover, credit rating in India is confined to rating of the capital issues and not of the issuing entities as a whole.”

Mr Leeladhar also felt that the credit rating provides a lagged indicator of the credit standing of an entity, and is not a lead indicator. He also added that the risk weighting scheme under standardised approach created incentives for some of the bank clients to remain unrated since such entities received a lower risk weight of 100 per cent vis-À-vis 150 per cent risk weight for a low rated client. He cautioned the banks to be watchful in this regard.