BBB Current Affairs

Fitch retains India’s sovereign rating at ‘BBB-‘ with ‘stable’ outlook

Global credit rating agency Fitch has kept India’s sovereign rating unchanged at ‘BBB-‘ with stable outlook. This rating is at junk bond or lowest investment grade with stable outlook. A rating upgrade changes profile of country and makes it attractive to investors. In 2017, Moody’s had upgraded India’s rating (to Baa2 from Baa3) after gap of nearly 14 years, while Standard & Poor’s (S&P) retained its BBB- rating with stable outlook.

Key Facts

According to Fitch, BBB- rating balances India’s medium-term growth outlook and favourable external balances with weak fiscal finances and some lagging structural factors, including governance standards and still-difficult but improving business environment.

The stable outlook reflects balancing of upside and downside risks to ratings. The main factors that, individually or collectively, upgrade India’s rating action are reduction in general government debt over medium term to level closer to that of rated peers, higher sustained investment and growth rates, without creation of macro imbalances, such as from successful structural reform implementation.

What is Sovereign Credit rating?

Sovereign Credit Rating

A sovereign credit rating is credit rating of country or sovereign entity. It gives investors insight into level of risk associated with investing in particular country, including its political risk. At request of country, credit rating agency evaluates country’s economic and political environment to determine representative credit rating. Obtaining good sovereign credit rating is usually essential for developing countries in order to access funding in international bond markets. Fitch Ratings, Moody’s Investors Service and Standard & Poor’s (S&P) are big three international credit rating agencies controlling approximately 95% of global ratings business

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Align pay in PSBs to that in CPSEs: BBB

The Bank Board Bureau (BBB) has recommended that Government should bring in reforms in the compensation process in public sector banks (PSBs) on the lines of Central Public Sector Enterprises (CPSEs).

BBB has suggested compensation reforms in PSBs so that best practices can be introduced ‘on the lines already prevalent in CPSEs.

It will play important role in attracting high-quality talent for non-executive directors and chairmen.  It will also maintain a level-playing field with the private sector with respect to role, responsibility and remuneration.

About Bank Board Bureau (BBB)
  • BBB is the super authority (autonomous body) of eminent professionals and officials for public sector banks (PSBs). It had replaced the Appointments Board of Government.
  • It is set up in April 2016 as part of seven point Indradhanush Mission to revamp the Public Sector Banks (PSBs).
  • Functions: Give recommendations to Government for appointment of full-time Directors as well as non-Executive Chairman of PSBs.
  • Give advice to PSBs in developing strategies for raising funds through innovative financial methods and instruments to deal with stressed assets.
  • Guide banks on mergers and consolidations and also ways to address the bad loans problem and among other issues.
  • Composition of BBB: It has three ex-officio members and three expert members, in addition to the Chairman. Former Comptroller and Auditor General (CAG) Vinod Rai is first and incumbent Chairman of BBB.

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