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Home News India S&P Raises Alarm: Slow growth rate will lead to rise in bad assets

S&P Raises Alarm: Slow growth rate will lead to rise in bad assets

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Global ratings firm Standard & Poor projected that India may risk the possibility of being the first to be ousted from the BRIC league unless the country seeks to address the growth issues and introduce political reforms that the agency said would aid in economic liberalization.
 
"Slowing GDP growth and political roadblocks to economic policy making could put India at risk of losing its investment grade rating", the US-based agency said in its report titled 'Will India Be The First BRIC Fallen Angel?' published Monday.

The BRIC nations are: Brazil, Russia, India and China. Among the four countries, India currently has the lowest credit rating and is the only one with a negative outlook. In April, S&P affirmed India's ‘BBB-' long-term sovereign credit rating, but revised the outlook on the rating to negative from stable.
 
S&P has expressed concern on grounds that government, "could respond by nudging the public sector banks to respond in a less commercially oriented manner." Government controls 70% stake in PSU bank.
“A persistent slowdown in GDP growth could result in a rise in non-performing loans (NPLs) to both public and private-sector borrowers.”

Recently, even the RBI deputy governor K C Chakrabarty has indicated that RBI is concerned about on rising bad loans in the economy adding that banks must improve their ability to manage asset quality. Gross bad debt rose 51% in one year to Rs 1,03,891 crore in December 2011, according to a reply to the Parliament by minister of state for finance Namo Narain Meena.

 

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