The Hindu Business Line : More RBI steps to check inflation likely: Crisil

Joint effort: (From right) Ms Roopa Kudva, Managing Director & CEO, Crisil; Mr Nachiket Mor, President, ICICI Foundation; and Ms Bindu Ananth, President, IFMR Trust, at a press conference In Mumbai on Thursday. –

Our Bureau

Mumbai, July 17 Further measures to combat inflation, which touched 11.91 per cent for the week ended July 5, are expected in the forthcoming review of the monetary policy, said Ms Roopa Kudva, Managing Director and CEO of rating agency Crisil, here today.

She said she expects the average inflation to be in the range of 8.5-9 per cent this year as the effect of the monetary tightening will be visible after a four-month lag.

GDP to slow

Commenting on the current macroeconomic situation, Ms Kudva said that she expected the GDP growth to slow down to 7.8 per cent in the current fiscal due to rising oil and commodity prices.

Rising interest rates were also exerting pressure on the growth rate, she said.

However, she does not expect a slowdown in investment, especially in the long run, as companies are still going ahead with their investment plans.

Ms Kudva was speaking to reporters at a function organised to announce a joint initiative between Crisil, ICICI Foundation and IFMR Trust to help rural households to find easy access to credit.

Regarding asset quality of banks, Ms Kudva said that retail NPAs could increase to around four per cent this fiscal against 2.4 per cent in the previous fiscal.

Responding to queries about the increased challenges in the real estate sector, Ms. Kudva said that small and medium builders could face pressure due to slackening demand as cost of funds had increased.

New rural initiative

Crisil, IFMR Trust and ICICI Foundation for Inclusive Growth today announced a partnership aimed at developing viable commercial enterprises focussed on helping low-income households augment their incomes and create assets.

The three have signed an MOU to work on this new project.

Commercial projects in the areas of rural development and poverty alleviation are not structured properly and therefore find it difficult to raise funds at a reasonable cost.

Crisil’s role in the new initiative would be to design and develop criteria and rating standards for micro finance institutions, urban local bodies and vocational training institutes. These institutions could use these ratings to access investors for funds, said Ms Kudva.

Rating process

IFMR Trust would facilitate the rating process by providing access to enterprises working in these areas. It would carry out the aggregation work and try to establish patterns among these institutions.

ICICI Foundation’s role would be to increase awareness and make the markets more responsive to the needs of these enterprises.

The aim of the whole process would be to pool portfolios across different micro finance institutions, turning them into a high quality asset and more attractive to investors.