KV Kamath says new DFIs should curb dependence on foreign funds

Making a case for an upgrade in India’s sovereign rating, KV Kamath, former chairman of the New Development Bank, said on Wednesday that the new development finance institution (DFI), which was approved by the Union Cabinet, would prevent ‘excessive dependence’ on foreign funds. Should be careful about

He said, “With whatever efforts the government is making, I think the sovereign rating will need to move forward. I don’t think they can keep India’s rating; Wherever you look, this rating is considered wrong by at least one notch, if not more, ”said Mr. Kamath. The Economic Survey 2020-21 also argued that India’s sovereign rating did not reflect its core principles. “The fifth-largest economy in the world has ever been ranked the lowest of investment-grade (BBB- / Baa3) in the history of sovereign credit ratings,” it noted, adding that it also harmed foreign portfolio flows. . .

Speaking at an event titled ‘Shaping Development Finance Institutions: New Opportunities and Policy Options’ hosted by the India International Center and RIS, Mr. Kamath said that the new DFI should be able to borrow from abroad at sovereign rates, but from overseas The first is called for careful consideration. Capital was chased.

“If you are going to use external lending for the need of Rs. What is the total cost and if it is still attractive to the borrower, the institute will have to evaluate it carefully.”

He stressed that global development banks’ soft loans’ were not really soft ‘and that’ excessive reliance on international funds’ would not be prudent.