Global ratings agency Moody's Investors Service lowered India’s sovereign credit rating outlook to negative from stable, citing rising risks to economic growth and increased probability of a more entrenched slowdown due to prolonged financial stress among rural households, weak job creation and credit crunch among non-bank financial companies (NBFCs). The agency affirmed the Baa2 foreign-currency and local currency long-term issuer ratings. A change in outlook to ‘negative’ is at times a precursor to a sovereign ratings downgrade unless things turn for the better. It is also perceived negatively by both investors, global and domestic. Moody’s had upgraded India’s sovereign ratings in November 2017 to Baa2 from Baa3. The negative outlook indicates that an upgrade is unlikely in the near term, the agency said, adding that it would likely change the rating outlook to stable if the likelihood that fiscal metrics would stabilise and improve over time increased significantly.
Chinese banks sue Anil Ambani
Three Chinese banks are suing Reliance Group chairman Anil Ambani in a London court for failing to pay back $680 million in defaulted loans. The Mumbai branch of Industrial & Commercial Bank of China, China Development Bank and the Export-Import Bank of China agreed to lend $925 million to Anil Ambani’s Reliance Communications (RCom) in 2012 with a pre-condition of providing a personal guarantee, ICBC’s lawyer Bankim Thanki told the court. Some repayments were made by RCom but in February 2017, it defaulted on its payment obligations. The embattled tycoon says that while he agreed to give a non-binding “personal comfort letter,” he never gave a guarantee tied to his personal assets to any “extraordinary potential personal liability.” Anil Ambani's personal fortune dwindled over recent years, losing his billionaire status.
IndiGo sign codeshare pact with Qatar Airways
India’s largest private sector airline Indigo has signed a codeshare agreement with Qatar Airways. Under this agreement, Qatar Airways will use its airline code “QR” on flights operated by Indigo originating from Doha to Indian destinations of Mumbai, Delhi and Hyderabad. The airline has filed a copy of its media statement to regulatory authorities as part of its compliance. The codeshare agreement comes into effect immediately and the ticket sales on this basis began on November 7, 2019. This is the second codeshare agreement for IndiGo as part of its growth strategy for international markets. It earlier signed an agreement with Turkish Airlines. Qatar Airways Group Chief Executive Akbar Al Baker said, “We are extremely proud to secure this strategic partnership with IndiGo, the largest airline in one of the world’s fastest growing aviation markets.”
Central Bank hopes to exit PCA this fiscal
Central Bank of India expects to come out of RBI’s prompt corrective action (PCA) framework in this financial year. The bank has plans to reduce its stock of bad loans through recoveries and sale of non-performing assets (NPAs), and at the same time raise money by selling investment in its housing finance arm and overseas joint venture. Pallav Mohapatra, MD and CEO of the bank, said, the bank’s capital adequacy was more than RBI’s prescriptions for 2020. However, its ratio of net NPAs was above 7% as against RBI’s prescription of below 6% for banks to exit the PCA framework. “There is a denominator effect in this because we have reduced our loan book,” said Mohapatra. In the quarter ended September, the bank reported a net profit of £13.4 million - its second consequent profit after several quarters of losses - compared to a loss of £92.4 million in the second quarter last year.
