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Financial Institutions and Services
Notes 7. Comment on the fallacies of credit rating agencies in the current subprime crisis that has
caused a great turmoil in the realty sector. What are your suggestions about the way in
which the credit rating agencies should revamp their methodology?
8. Recently, Fitch has projected that NPA in Indian banking will rise by 10% by 2010. What
will be the likely impact of the same in the Indian Banking sector?
9. In 2007, India secured investment grade rating from global agency Standard and Poor's for
the first time in 14 years. What did it mean for the industry?
10. “India's credit rating is facing growing pressure because of the widening fiscal deficit and
the country's increasing dependence on foreign capital inflow, global rating agency
Moody's (May 28, 2009).” Comment.
11. According to Standard & Poor's 2009 Asia Pacific Mid Year Market Outlook, the Indian
economy has bottomed out and is set for positive growth in 2010. Justify with reasons.
Answers: Self Assessment
1. credit worthiness 2. ability, willingness
3. Securities and Exchange Board of India 4. records, documents
5. two 6. three
7. three 8. SEBI, reject
9. Code of Conduct 10. rejected
11. renewal 12. protect
13. monitor 14. lack of co-operation
15. procedures
17.8 Further Readings
Book Michael K. Ong, Credit Ratings: Methodologies, Rationale and Default Risk, Risk Books.
Online links www.indianembassy.org
www.onicra.com
www.sebi.com
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