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Mr. D R Dogra

Mr.Dogra, MD & CEO of CARE ratings began his session with a brief introduction about his company CARE ratings (Credit Analysis and Research Ltd). He explained some of the achievements of his company such as: it is the second largest rating agency, leader in several sectors etc

    With this, he went on to the topic and began with the factors involved in the Credit Crisis. He listed down the following factors like Sub Prime loans, Mortgage Backward securities, Credit Default swaps, Asset based lending, Easy money etc. Then he explained the reasons for the failure of structured products. Traditional, computer models proved to be a poor fit for structured products, the actual scenario differed from the assumptions and the sharp erosion of liquidity mainly contributed to the failure of structured products. Naturally he gave us his perception on the future course of action to be taken to handle the situation. Some of his thoughts were to avoid conflicts of interest, investment in developing rating models customized for various products, increasing awareness among public.

            Then, Mr.Dogra started to focus on India, rather than the whole world in general. He talked about the credit crisis in India. The withdrawal of funds by foreign investors and the fact that commercial credit had dried up in India had contributed drastically to the credit crisis. He also mentioned how the Indian scenario was different from the world’s big picture during the credit crisis. Some of the key differences he talked about were: Absence of subprime loans, credit default swaps, easy money conditions and the hold & distribute policy. Further, he explained what India’s approach was in trying to handle the credit crisis. Banks in India were subjected to prudential regulation, asset liability management guidelines were shared, base II framework and dynamic provisioning were introduced. The NBFCs (Non-Banking Finance Company) also tightened the regulations and suspensions to face the credit crisis.

            Mr.Dogra concluded his session with his thoughts on how transparency of the ratings can be improved. Half yearly audits made compulsory, Default studies to be publicized, latest ratings and movement in ratings, clearly indicative rating symbols, disclosure about complexity levels and unsolicited credit ratings to explicitly be indicated were some of his views on improving transparency of the ratings.