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Moody's has allowed its Indian affiliate ICRA to enter domestic credit and corporate instruments rating business in all Asian countries except four. Confirming this Mr P.K. Choudhuri, group CEO of ICRA Ltd, told Business Line that the rating services tie-up with Moody's, the largest investor (28.51 per cent) in ICRA, is dictated by a “perpetual arrangement”.
“However, a periodic consultation process determines certain specific issues under an on-going technical services agreement,” he explained.
The arrangement does not permit ICRA to enter certain Asian markets such as Japan, China including Hong Kong, South Korea and Singapore, where Moody's is present.
Geographical growth
Geographies outside Asia and sovereign rating segment are also out of bounds for the Indian company. ICRA once had stepped into Bulgaria, but eventually made way for Moody's through a consultation process.
In the domestic markets, foreign currency borrowings are also out of the rating domain of the local affiliate. However, ICRA is free to expand geographically in any other businesses than rating services.
According to market circles, this is significant in the context of international practices followed by the fiercely competitive and closely guarded global rating majors. Banking experts said this was also a pointer to the maturity and expertise Indian rating services outfits have gained over the past three decades.
Indonesia, where ICRA has just stepped in as Moody's withdrew, has a more developed bond market but a weaker stock market than India, Mr Choudhuri said. “We would take couple of years to break even,” ICRA group CEO said. For Sri Lanka, ICRA has set a break-even timeframe of three years.
> jayanta_mallick@thehindu.co.in
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