Appreciating the views of Standard & Poor's on the Indian banking sector, planning commission deputy chairman Montek Singh Ahluwalia on Friday said the rating agency has corrected the negative signals given by its global rival Moody's.
"I am happier at the outcome. The earlier Moody's downgrade has been offset by S&P. What S&P has said has a lot of substance to it," Ahluwalia told reporters here.
"Our's is a very well-regulated banking sector and there was no justification whatsoever for raising questions on the financial stability of the banking sector," he added.
Yesterday, S&P had upgraded its rating of the Indian banking sector, stating that domestic regulations are in line with international standards.
"In our view, banking regulations in India are in line with international standards and the regulator (RBI) has a moderately successful track record," S&P said while upgrading the risk profile (BICRA) a notch higher to 'Group 5'.
Its action came a day after another global ratings agency, Moody's, downgraded the outlook of the Indian banking system to "negative" from "stable" amid an economic slowdown that it said was affecting asset quality, capitalisation and profitability.
Asked if the downward revision of the economic growth projections for this fiscal are likely to affect the ratings agencies' views on India's sovereign ratings, Ahluwalia said: "The growth target has been already moderated... At 7.6%, the economy is growing much faster than any other economy in the world."
"So I think our objective should not be to worry about the fact that it has slowed down, but should be to see how to make it grow at 8% plus next year," he said.