India has pressed the BRICS (Brazil, Russia, India, China and South Africa) nations to set up an independent credit rating agency of the five-member group. It was on sidelines of the first meeting of BRICS Finance Ministers and Central Bank Governors held along with IMF/World Bank Spring Meetings in Washington, US.
India sought the support of BRICS members in building consensus amongst BRICS membership on the BRICS Rating Agency proposal. It also requested to take forward report to be submitted by expert group set up under the aegis of BRICS Business Council to study the feasibility of the BRICS Rating Agency.
India had first mooted the idea of having such an agency for the BRICS grouping to solve impediments for the emerging market economies posed by present credit rating agency market that is dominated by S&P, Moody’s and Fitch. These three western rating agencies hold over 90% of the sovereign ratings market.
Emerging economies claim that western ratings firms are biased, pessimistic on the developing countries and optimistic on developed nations. They also have concerns over methodologies of the three global agencies.
Other issues discussed during meeting
It discussed enhancing project pipelines of New Development Bank (NDB) evenly across member countries, expansion of NDB’s membership. It also deliberated on proposal of South African Presidency for setting up working group on illicit financial flows and BRICS Task Force on Public Private Partnership. Issues related to BRICS Contingent Reserve Arrangement (CRA) as well as BRICS Bond Fund were also discussed.