Benaulim: Five-nation group BRICS Sunday agreed to set up an independent rating agency based on market-oriented principles saying it would further strengthen global governance architecture.
"We welcome experts exploring the possibility of setting up an independent BRICS Rating Agency based on market-oriented principles, in order to further strengthen the global governance architecture," stated the joint declaration issued after the 8th BRICS Summit here.
"We believe that BRICS institution-building is critical to our shared vision of transforming the global financial architecture to one based on the principles of fairness and equity," the declaration stated further.
"In order to further bridge the gap in the global financial architecture, we agreed to fast track the setting up of a BRICS Rating Agency," Prime Minister Narendra Modi said in a statement at the conclusion of the BRICS Summit.
The BRICS countries have already set up New Development Bank, which became operational last year, to meet funding requirements of the members.
Batting for a new credit rating agency backed by BRICS group, New Development Bank president K V Kamath had expressed concerns over methodologies of the big three global agencies saying that these are constraining growth in emerging nations.
Kamath had said despite having deep capital buffers, the ratings of multilateral banks like the BRICS-promoted NDB are affected due to the parent countries' sovereign ratings.
Citing the case of NDB itself, which is planning to get itself rated for bond-raising in many countries, he had said its rating will be affected because the promoter countries are not AAA-rated.
"We need not constrain ourselves from our ability to do business...If this is the norm, I fear growth in the developing world will also be impacted," Kamath had said
Kamath comments followed concerns expressed by the BRICS (Brazil, Russia, India, China, South Africa) group against the working of the rating market, currently controlled by the Big Three - S&P, Fitch and Moody's - all based in the US.
This has led the five-member grouping to pursue idea of creating its own independent rating agency, which was discussed during the two-day annual summit.
Earlier, the Exim Bank of India too had made a strong pitch for independent rating agency for the BRICS nations, saying the way the present big three are going about their job reeks of conflict of interest.