Key Points
Indian law-enforcement agency's investigations may not lead to regulatory action but that hurts business and access to funds, Fitch Ratings said on Wednesday, adding that the recent searches at Manappuram Finance also expose the complexity of country's corporate governance landscape...
"Such searches need not lead to further regulatory action, but investigations raise reputational risk that could tarnish a lenders business prospects and constrict funding access due to reduced market confidence - potentially affecting an issuers credit profile - even if no wrongdoing is identified," the rating agency said in a note...
Kerala-based Manappuram Finance, whose assets worth Rs 143 crore were frozen by the Enforcement Directorate earlier this month, had claimed that the agency's visit was based on a "malafide FIR" pertaining to now defunct Manappuram Agro Farms..
Significant adverse disclosures could lead Fitch to reassess corporate governance, execution and risk controls, among other factors, and may also prompt regulatory action that could weaken the business profile...
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