Mumbai: After a dramatic free-fall in
fiscal 2009, the credit quality of Indian companies has now
started to stabilise led by positive stock market conditions
and the Government's monetary easing, a study by rating agency
Crisil Ratings said.
CRISIL's Modified Credit Ratio (MCR) increased to 0.88
for the first-half of 2009-10, after dropping to a nine-year
low of 0.86 in 2008-09, the agency said in a report.
"Companies have easier access to funds, as a result of
the Governments fiscal and monetary easing, and positive
stock market conditions; in addition, lower commodity prices
have led to lower working capital requirements," Crisil said.
However, Crisil expects the recovery in credit quality
to be gradual, and may not necessarily be smooth.
"There are signs that both the monetary and fiscal
easing and the lower commodity prices are temporary.
Additionally, unlike in the late 1990s, we see no prospect of
a sudden and sustained upturn in economic conditions to lift
corporate performance," CRISIL, Senior Director, Raman
Uberoi, said.
Crisil said the Government was looking to reverse its
"present supportive stance" of low interest rates and liberal
monetary policies.
Bureau Report
First Published: Thursday, October 15, 2009, 23:54