India hits back at at Moody’s for lowering SBI’s rating when many weaker lenders globally enjoyed a higher rating
S. Roy
Oct. 23, 2011

Indian finance ministry is upset on Moody's for giving adverse comments about SBI and other Indian banks, calling it an ''effort to destabilize our (Indian) banking system.''

“The Crisil report is uncalled for at this stage. No one is raising red flag over what happened in Europe. This does not mean the banking sector is at risk,” Indian Department of Financial Services (DSF) secretary D K Mittal said. “When you downgrade SBI you should also look at similarly-placed banks globally. They enjoy higher ratings than SBI.”

Interestingly, State Bank of India (SBI) chairman Pratip Chaudhuri had defended ratings agency, saying, “How could Italy have AAA rating when good Chinese banks don’t get it? But the question is you have to recognise that Italy has an open capital account system which China does not. So there would be some logic on their side. There is a case for putting up a more informed presentation to the rating agencies.”

“If you want to reform a bank, first you warn them,” said Mittal. “You are not treating a small bank… We are in touch with Moody’s. We are meeting Crisil tomorrow. It should not happen again… There is no golden rule that ratings should not be upgraded again if parameters are improved.”

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