MUMBAI: Regulators may have advised that borrowers need to be dealt with leniently during the covid-19 outbreak and the resultant lockdown, but lack of mutual trust between rating agencies and issuers of debt papers threatens to escalate to a larger conflict.
The Reserve Bank of India (RBI) has declared a moratorium on bank loans for three months. However, the Securities and Exchange Board of India (Sebi) is hesitant to grant a similar moratorium on debt market instruments.
The market regulator, on 30 March, had said if rating agencies feel that delays in repayment were solely due to the lockdown, leading to operational challenges, they may not consider it as a default.