I tried over 6 months…and AT LAST…I got a meeting with a senior psu banker recently and I asked him about CARE! Here is how it went:-
1- RBI has allowed just 6 banks as of now to try internal ratings. Its more of an experimental thing.
2- There is huge amount of apprehension within banks to migrate to this system largely due to 2 reasons:- A) No one wants to be held accountable if a large loan goes bad. B)They are YEARS away from developing systems and expertise in this area.
3- Internal ratings ARENT compulsory. Banks will always prefer if outside ratings agengies validate their ratings.
All in all, the senior banker said that these internal ratings will not be a factor for another 3-4 years atleast. And by then, the corporate bond market and capital market revenues will keep increasing and the share of debt ratings will keep decreasing anyways (Just like the US and EU).
*Another major factor was that LIC has just bought a huge chunk from IDBI and Canara bank’s selling has also stopped since last 10 days and today we saw the first signs of the lift from this TECHNICAL OVERHANG as CARE shot up 9.5% intraday!
*This lack of interest is precisely why I feel great things are coming CAREs way in terms of stock price action. I love that everyone is apprehensive and is not touching it!!