While banks should be moving towards advanced approaches with less reliance on rating agencies, the rating agencies in turn have to take a holistic approach while awarding ratings having regard to end use, asset bubbles and financial stability. The system of exchange of information that has been put in place by RBI should be made use of effectively by banks.
Notwithstanding this noteworthy progress, critical challenges remain: Strains persist in many financial markets across the globe, financial institutions face significant additional losses, and many businesses and households continue to experience considerable difficulty gaining access to credit. Because of these and other factors, the economic recovery is likely to be relatively slow at first, with unemployment declining only gradually from high levels.