S and P's views have offset Moody's downgrade of banking: Montek

"I am happier at the outcome. The earlier Moody's downgrade has been offset by S&P. What S&P has said has a lot of substance to it," Ahluwalia told reporters here.

"Our's is a very well-regulated banking sector and there was no justification whatsoever for raising questions on the financial stability of the banking sector," he added.

Yesterday, S&P had upgraded its rating of the Indian banking sector, stating that domestic regulations are in line with international standards.

"In our view, banking regulations in India are in line with international standards and the regulator (RBI) has a moderately successful track record," S&P said while upgrading the risk profile (BICRA) a notch higher to 'Group 5'.

Its action came a day after another global ratings agency, Moody's, downgraded the outlook of the Indian banking system to "negative" from "stable" amid an economic slowdown that it said was affecting asset quality, capitalisation and profitability.

Asked if the downward revision of the economic growth projections for this fiscal are likely to affect the ratings agencies' views on India's sovereign ratings, Ahluwalia said: "The growth target has been already moderated... At 7.6 per cent, the economy is growing much faster than any other economy in the world."
"So I think our objective should not be to worry about the fact that it has slowed down, but should be to see how to make it grow at 8 per cent plus next year," he said.

He said a growth rate of 7.6 per cent, as projected by the Reserve Bank, or of 8 per cent, as projected by the Planning Commission, is reasonable.

He also termed the latest developments in Greece, where a national unity government has taken over, as positive.

"It looks that the political impasse in Greece, which actually prevented the implementation of the Greek package, may be overcome. There was also lot of concern whether eventually Greece would lead to contagion in other European countries... I am sure that the European finance ministers are looking at how to avoid contagion," he said.