Monday, November 14, 2011

Downgarding banking system

·         Moody downgraded rating for entire indianbanking sector from stable to negative
·         Concern over weakening loan quality
·         High inflation
·         Rising interest rates-> falling interest margins
·         Positives of indina banks
o   Adequately capitalised
o   Better regulated
Impact of downgrade
·         Cost of borrowing from overseas increases
Defects of rating process
·         Don’t capture the strengths and weakness of government ownership of most of indian banks

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