India seeks to challenge global credit rating norms, says Care Ratings CEO

Care Ratings CEO Mehul Pandya said India can challenge global credit rating norms and reduce subjectivity in assessments. The firm is expanding globally, covering 45 countries, while focusing on transparency, emerging markets and strengthening India’s position in sovereign ratings

Washington: As global investors reassess risk in a shifting economic order, Mehul Pandya believes India has a chance to challenge long-standing norms in sovereign credit ratings and to question why some economies are judged differently than others.

Pandya, Managing Director (MD) and Group CEO of Care Ratings Limited, is in Washington for the Spring Meetings of the International Monetary Fund (IMF) and the World Bank, where he is meeting policymakers, investors and multilateral institutions to expand the firm’s global footprint.

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In an interview here at the IMF headquarters, the Care Ratings Limited MD described India as “one of the largest rating markets globally”, citing a distinctive feature: unlike many countries, India rates not only bonds but also a significant portion of bank debt. This, combined with coverage spanning large corporates, state and Central undertakings, mid-sized firms and small and medium enterprises, creates what he called “a very unique market”.

That domestic scale, Pandya said, provides the foundation for a global push.

At a group level, he said, Care Ratings is already “a part of the global top 10”.

In sovereign global-scale ratings, the firm has expanded rapidly, covering 45 countries within about 18 months, placing it “number four in terms of the number of countries which are getting covered”.

For Pandya, India’s late entry into global ratings is less about capability and more about mindset.

“There was no reason why a country, which is the fourth largest economy globally, should not be having a rating agency in the global scale rating space,” he said, pointing to the need for “conviction, confidence as well as determination”.

Pandya was also candid about the barriers posed by established global players.

The initial response, he said, tends to be scepticism.

“The first challenge is in terms of the acknowledgement itself,” he said, describing a progression from “disdainful neglect” to “grudging acknowledgement” before eventual acceptance.

He pointed to signs of shifting dynamics, noting that after Care Ratings established its global operations in India’s Gujarat International Finance Tec-City (GIFT City), other agencies began seeking similar regulatory presence.

“The moment there is a serious player, there has to be an acknowledgement over a period of time,” Pandya said.

At the same time, Pandya raised questions about consistency in sovereign ratings.

Referring to India’s rating trajectory, he noted that an upgrade came “almost after two decades”, despite what he described as “enough triggers” earlier.

“It is for the rating agencies to explain why those triggers were not factored in and why now,” the Care Ratings Limited MD said.

He drew a contrast with Greece, which has a history of default yet has seen rating improvements.

India, he noted, “did not default” even during the 1991 balance of payments crisis.

Such comparisons, he said, “raise questions as to why a different approach is taken for one country and another.”

Pandya attributed such discrepancies partly to subjectivity.

“The moment there is a significant reliance on subjective parameters, there could be a tendency to justify an outcome,” he said.

Care Ratings, he added, is attempting to “reduce this subjectivity cushion” by increasing transparency so that both issuers and investors understand how assessments are made.

Technology, he said, is playing a growing role but within limits.

Artificial intelligence is used “extensively” to aggregate and validate data from sources including multilateral institutions, Finance Ministries and central banks. But final decisions remain human-led.

“It will never substitute human intelligence; it is the view of the committee which prevails,” Pandya said.

Looking ahead, the Care Ratings Limited MD said the firm will prioritise emerging markets while building outreach in advanced economies, where much of the capital originates.

The goal, he said, is to be present “in every single economy which matters”, though he acknowledged it would be “a step-by-step process”.

Global credit rating agencies play a pivotal role in shaping investor sentiment and determining borrowing costs for sovereigns and corporations.

Their assessments influence capital flows, particularly in emerging markets seeking foreign investment.