The ways of rating agencies

Rating agencies are known to move in sync, almost to the point of exhibiting herd behaviour. So, it is a little unusual to see the global top two – Moody's and Standard & Poor's (S&P) – taking diametrically opposite positions on the country's banking system, that too within a space of two days. On Thursday, Moody's downgraded its outlook for India's banks from ‘stable' to ‘negative', citing slowing economic momentum, high inflation and rising interest rates that could “adversely affect (their) asset quality, capitalisation and profitability”. 

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