Washington, April 14 (NationPress) As global investors reevaluate risk in a transforming economic landscape, Mehul Pandya sees a significant opportunity for India to disrupt entrenched practices in sovereign credit ratings and challenge the disparities in how economies are assessed.

Pandya, the Managing Director and Group CEO of Care Ratings Limited, is currently in Washington for the Spring Meetings of the International Monetary Fund (IMF) and the World Bank. During this visit, he is engaging with policymakers, investors, and multilateral organizations to enhance the firm's global presence.

In an exclusive interview at the IMF headquarters, Pandya describes India as “one of the largest rating markets worldwide”. A defining characteristic, he explains, is that unlike many nations, India evaluates not just bonds but also a substantial amount of bank debt. This broad coverage, which includes large corporations, state and central enterprises, as well as mid-sized and small businesses, results in what he refers to as “a very unique market.”

Pandya asserts that this domestic scale serves as a robust foundation for a global expansion.

At a collective level, he mentions that Care Ratings has already positioned itself among the global top 10 rating agencies.

In the realm of sovereign ratings, the firm has experienced rapid growth, encompassing 45 countries in the span of approximately 18 months, making it number four in terms of the number of countries covered.

Pandya believes that India’s delayed entry into the global ratings arena is less about capabilities and more about the prevailing mindset.

“There was no justification for a country that is the fourth largest economy globally not to have a rating agency in the global scale rating space,” he stated, emphasizing the need for “conviction, confidence, and determination.”

He candidly acknowledged the challenges posed by established global entities.

The initial reaction, he explained, often manifests as skepticism.

“The primary challenge... is gaining recognition,” he noted, outlining a progression from “disdainful neglect” to “grudging acknowledgment” and ultimately acceptance.

Pandya highlighted indications of evolving dynamics, mentioning that following the establishment of Care Ratings’ global operations in India's Gujarat International Finance Tec-City (GIFT City), other agencies began pursuing a similar regulatory footprint.

“The moment a serious player emerges... acknowledgment will follow over time,” he remarked.

Furthermore, Pandya raised concerns regarding the inconsistency in sovereign ratings.

He pointed out that India’s rating upgrade came “almost after two decades,” despite what he deemed “sufficient triggers” previously.

“It is the responsibility of rating agencies to clarify... why those triggers were overlooked... and why there is a change now,” said the Care Ratings Limited MD.

He contrasted this with Greece, which has a history of defaults yet has seen improvements in its ratings.

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

Such comparisons, he asserted, “raise questions regarding the differing approaches for various countries.”

Pandya attributed these inconsistencies, in part, to subjectivity.

“When there is a heavy reliance... on subjective parameters... it could lead to justifications for certain outcomes,” he stated.

Care Ratings, he mentioned, is working towards “minimizing this subjectivity” by enhancing transparency, allowing both issuers and investors to comprehend how evaluations are conducted.

Technology, according to him, is increasingly influential, albeit within certain limits.

“Artificial intelligence is utilized extensively” to aggregate and validate data from multiple sources, including multilateral institutions, Finance Ministries, and central banks. However, he emphasized that final decisions remain in human hands.

“It will never replace human intelligence... it’s the committee's perspective that prevails,” Pandya affirmed.

Looking to the future, Pandya stated that Care Ratings aims to focus on emerging markets while simultaneously expanding its reach in advanced economies, where a significant portion of capital originates.

He expressed a desire to be present “in every critical economy,” recognizing it as a “step-by-step process.”

Global credit rating agencies are crucial in shaping investor sentiment and determining the borrowing costs for both sovereigns and corporations.

Their evaluations significantly influence capital flows, especially in emerging markets that are in pursuit of foreign investments.