FinMin, Moody's will discuss sovereign rating on 14 Nov

New Delhi:Credit ratings agency Moody's,which lowered the outlook for Indian banking system, will holdconsultations with finance ministry officials next week aspart of the exercise to review the country's sovereign rating.

"We are meeting Moody's on Monday (14 November) todiscuss India's sovereign credit rating," a senior financeministry official said.The meeting is being held at a time when the Indianeconomy is passing through a rough patch. As per the ReserveBank of India (RBI), the growth rate during the current fiscal

is expected to moderate to 7.6 percent from 8.5 percent lastyear.

[caption id="attachment_128476" align="alignleft" width="380" caption="The rating agency yesterday downgraded the outlook forthe Indian banking system to "negative" from "stable".Reuters"][/caption]

The officials are likely to talk about the steps thegovernment has been taking to reduce the fiscal deficit,reform the direct and indirect taxation systems and recapitalisethe banking sector.

The economy has been braving high inflation and theCentre's fiscal deficit may exceed the budget estimate of 4.6 percent in view of poor tax collection and low realisation fromsale of government equity in state-owned companies.

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Moody's has assigned Baa3, the lowest investment gradingrating, to India.The rating agency yesterday downgraded the outlook forthe Indian banking system to "negative" from "stable" sayingthat economic slowdown would impact asset quality,capitalisation and profitability.

However, differing with the downgrade accorded byMoody's, ratings agency Standard & Poor's today upgraded theIndian banking sector saying its domestic regulations are inline with international standards.Ratings are significant as they help the country andother entities to borrow funds globally at competitive rates.

PTI