a) Search for quality

Credit rating agencies may be in for a tough ride as the Securities and Exchange Board of India continues to tighten the screws on them. The market regulator has released a consultation paper seeking feedback on a new set of rules drafted to improve “market efficiency” and enhance “the governance, accountability and functioning of credit rating agencies”. Among them are provisions to restrict cross-shareholding between rating agencies without regulatory approval to 10%, and increase the minimum net worth requirement for existing and new agencies from Rs.5 crore to Rs.50 crore. Another mandates at least five years’ experience for promoters of rating agencies. SEBI has proposed disclosure norms to improve investor awareness about the operations of rating agencies. The spin-off of non-core operations of rating agencies will allow SEBI to focus on regulating just their credit rating operations. SEBI has spelt out its rationale for proposing each of the rules. SEBI’s predominant concern, apart from improving the information available to investors, seems to be to prevent rating agencies from resorting to collusion in reaching decisions. This effort is in line with SEBI’s crackdown on the agencies after the default in 2015 of a highly-rated debt issued by Amtek Auto. The new rules, if they come into force, may not have any substantial impact on the quality of credit rating in India. Prima facie, the intended effects of the rules sound convincing. What is unclear are their unintended effects on competition in the rating space. Also, how the rules will address the problem of “rating shopping” that plagues the business of credit rating in the country is unknown. The present business model of rating agencies is seen to allow considerable room for issuers of securities to shop for a favourable rating or avoid negative ratings by severing their ties with these agencies. Prudential regulation is thus justified to tackle this problem. This criticism, however, ignores the reputational damage these agencies suffer after each corporate default. Repeated failures have not affected the business of rating agencies, primarily due to the lack of alternative service providers who can help out investors. Individual creditors have thus had to trust the ratings of the existing rating agencies at their own peril, even after repeated crises. As is well-known today, the Indian credit rating market is an oligopolistic one due to the high barriers to entry. SEBI’s proposed move to impose further quality requirements on rating agencies is unlikely to change things for the better, or raise further barriers. The way forward lies in making it easier for new players to enter the credit rating space and compete against incumbents. This will go a long way towards making credit rating agencies actually serve creditors rather than borrowers.

b) The disaster next door

In a span of two weeks, almost 300,000 Rohingya have crossed over to Bangladesh from the northern Rakhine state in Myanmar, putting Bangladesh under immense strain and compelling the refugees to find shelter in squalid, unsanitary camps scattered along the Myanmar-Bangladesh border. Excluded from the 135 officially recognised ethnic groups, the Rohingya have been harassed and hounded by the Myanmar authorities for decades. The latest surge follows attacks on police posts by an extremist Rohingya group in late August and military action. While the Myanmar authorities claim that 400 lives have been lost, advocates cite double this number.

Where is the spirit?

The flight of the Rohingya has quickened in the past two weeks, but Rohingya refugees have been trying to nd a home outside their native Rakhine for years now, braving human traffickers and fraught conditions on rickety, overcrowded boats. The Rohingya have also sought refuge in India where they have been shunned, denied basic public services and deemed by authorities as ‘the undesirables’. While the government has called them to be illegal immigrants and trespassers, the fact is that India, throughout its history, has been generously accommodative towards refugees in the neighbourhood fleeing persecution, which includes Parsis, Tibetans, Afghans, Sri Lankan Tamils, and Bangladeshis during the war of liberation in 1971. India has prided itself in its tradition of Atithi Devo Bhava. The stance on the Rohingya issue by Prime Minister Narendra Modi, during his recent visit to Myanmar, has been disappointing and is contradictory to the values of hospitality and inclusiveness that India stands for. South Asia, particularly Bangladesh, which has been most affected by the crisis, was hopeful that Mr. Modi would express concern about the humanitarian crisis with Myanmar’s State Councillor and Nobel Peace Prize winner Aung San Suu Kyi. Instead, he was seen empathising with Myanmar, and the joint statement at the end of the visit said: “India stands with Myanmar over the issue of violence in the Rakhine state which has led to loss of innocent lives.” In doing so, he overlooked the atrocious crimes committed in the neighbourhood and almost turned a blind eye to both the untold sufferings caused to the refugees fleeing persecution and the resulting difficulties that a resource-constrained country such as Bangladesh has been put to — a country which Indian politicians and officials frequently refer to as a role model of friendship in India’s neighbourhood.

Bangladesh’s burden

International relief agencies in Bangladesh such as the office of the UNHCR and the World Food Programme are struggling to attend to the large number of refugees arriving each day on foot or by boat (picture shows refugees at the border, at Teknaf, Bangladesh). Bangladesh, itself one of the world’s most densely populated nations, has hosted more than 600,000 Rohingya compared to 40,000 by India. Initially, hesitant to open borders along the Naf river, Bangladesh has now started allowing in refugees. Through the International Committee of the Red Cross, Dhaka has proposed that Myanmar secure areas in Rakhine under international relief agency supervision, but there has been no response so far from Myanmar. Bangladesh has plans of making another 607 hectares of land available near the Myanmar border for camps to accommodate refugees. It has also urged the international community to put pressure on Myanmar to take back the refugees and stop the violence against them. Bangladesh Prime Minister Sheikh Hasina recently said: “It affects a country’s dignity when tens of thousands of its own nationals are fleeing home to take refuge outside.”

On the other side of the fence

Last Friday, India’s move to dissociate itself from the Bali Declaration adopted at the World Parlimentary Forum on Sustainable Development in Indonesia, and which called “on all parties to contribute to the restoration of stability and security … respect human rights of all people in Rakhine State regardless of their faith and ethnicity, as well as facilitate safe access for humanitarian assistance”, puts into question its respect for human rights and the treatment of minorities. It weakens India’s moral authority to speak for minorities in other parts of its neighbourhood. Interestingly Nepal, Bhutan and Sri Lanka joined the declaration. In his 2015 visit to Bangladesh, Mr. Modi used eloquent phrases to describe the India-Bangladesh friendship. Since 2009, Bangladesh has emerged as one of India’s most trusted neighbours, with Dhaka addressing almost all of New Delhi’s security concerns. This includes cracking down on cross-border terrorism and insurgency conducted against India from Bangladeshi soil. The India- Bangladesh border today is one of the safest for India, enabling massive redeployment of its vital border resources for other purposes. Despite this, Bangladesh has neither received water from the Teesta or support in times of humanitarian crisis from its biggest neighbour. Ironically, when Bangladesh procured two submarines from China, indicating the growing economic and defence ties between the two countries, New Delhi rushed its then Union Defence Minister, Manohar Parrikar, to Dhaka to elevate military cooperation. Such promptness is missing when it comes to supporting Bangladesh when it is overcome by helpless refuges persecuted at home and accepted by none. The world does not expect Myanmar’s other big neighbour, China, to be vocal about the atrocities being committed, but as the upholder of democratic values, India has a unique opportunity to demonstrate statesmanship and regional leadership by mediating a solution to the Rohingya crisis on the basis of a report of the Advisory Commission on Rakhine State headed by former UN Secretary General Ko Annan and set up by none other than Ms. Suu Kyi. While Myanmar is an important factor in India’s ocean diplomacy and a valuable stakeholder in its ‘Look East’ Policy, India’s nonchalant attitude towards the humanitarian plight of the Rohingya reflects inadequate moral leadership and an inability to rise to the occasion as expected from a regional power vying to enhance its influence in the neighbourhood. One of the reasons why India, despite its enviable soft power and formidable hard power, fails to generate confidence in the region, including with friends such as Bangladesh, is its complex geopolitics based more on political opportunism and economic interests as opposed to principles and values, practised consistently. This must be food for thought for India.


1) Screws on

Meaning: to fasten, tighten, force, press, stretch tight, etc.,

2) Accountability

Meaning: The fact or condition of being accountable; responsibility.

Example: Lack of accountability has corroded public respect for business and political leaders.

Synonyms: Responsibility, Liability

Antonyms: Unaccountability

3) Disclosure

Meaning: The action of making new or secret information known.

Example: A judge ordered the disclosure of the government documents.

Synonyms: Revelation, Declaration

Antonyms: Concealment

4) Unintended

Meaning: Not planned or meant.

Example: The unintended consequences of people’s actions.

Synonyms: Unexpected, Unplanned

Antonyms: Expected, Planned

5) Rating shopping

Meaning: Rating shopping occurs when an issuer chooses the rating agency that will assign the highest rating or that has the most lax criteria for achieving a desired rating. Rating shopping rarely involves corporate, sovereign, and municipal bonds.

6) Prudential

Meaning: Involving or showing care and forethought, especially in business.

Example: The US prudential rules prevented banks from lending more than fifteen per cent of their capital to any one borrower.

7) Oligopolistic

Meaning: Oligopoly is a market structure in which a small number of firms has the large majority of market share. An oligopoly is similar to a monopoly, except that rather than one firm, two or more firms dominate the market.

8) Barriers

Meaning: A fence or other obstacle that prevents movement or access.

Example: The mountain barrier between Norway and Sweden.

Synonyms: Fence, Hurdle

9) Compete

Meaning: Strive to gain or win something by defeating or establishing superiority over others.

Example: Universities are competing for applicants.

Synonyms: Participate, Engage

Antonyms: Agree

10) Incumbents

Meaning: The holder of an office or post.

Example: The present incumbent will soon be retiring.

Synonyms: Holder, Bearer

11) Immense

Meaning: Extremely large or great, especially in scale or degree.

Example: The cost of restoration has been immense.

Synonyms: Huge, Massive

Antonyms: Tiny

12) Squalid

Meaning: (of a place) extremely dirty and unpleasant, especially as a result of poverty or neglect.

Example: The squalid, overcrowded prison.

Synonyms: Dirty, Slummy

Antonyms: Clean, Pleasant

13) Harassed

Meaning: Feeling or looking strained as a result of having too many demands made on one.

Example: It is a godsend for harassed parents.

Synonyms: Strained, Harried

Antonyms: Carefree

14) Hounded

Meaning: Harass, persecute, or pursue relentlessly.

Example: She was hounded by the Italian press.

Synonyms: Bother, Trouble

15) Deemed

Meaning: Regard or consider in a specified way.

Example: The event was deemed a great success.

Synonyms: Consider, Count

16) Accommodative

Meaning: (of a building or other area) provide lodging or sufficient space for.

Example: The cottages accommodate up to six people.

Synonyms: House, Board

17) Fleeing

Meaning: Run away from a place or situation of danger.

Example: To escape the fighting, his family fled from their village.

Synonyms: Run, Escape

18) Stance

Meaning: The way in which someone stands, especially when deliberately adopted (as in cricket, golf, and other sports); a person’s posture.

Example: She altered her stance, resting all her weight on one leg.

Synonyms: Posture, Pose

19) Contradictory

Meaning: Mutually opposed or inconsistent.

Example: The two studies came to contradictory conclusions.

Synonyms: Opposed, Contrary

Antonyms: Consistent, Compatible

20) Empathising

Meaning: Understand and share the feelings of another.

Example: Counsellors need to be able to empathize with people.

Synonyms: Identify, Sympathize

21) Atrocious

Meaning: Of a very poor quality; extremely bad or unpleasant.

Example: He attempted an atrocious imitation of my English accent.

Synonyms: Brutal, Savage

Antonyms: Admirable, kindly

22) Persecution

Meaning: Hostility and ill-treatment, especially because of race or political or religious beliefs; oppression.

Example: Her family fled religious persecution.

Synonyms: Oppression, Victimization

23) Constrained

Meaning: Appearing forced or overly controlled.

Example: He was acting in a constrained manner.

Synonyms: Artificial, Unnatural

Antonyms: Relaxed

24) Densely

Meaning: In a closely compacted or crowded manner; thickly.

Example: A densely populated country.

25) Hesitant

Meaning: Tentative, unsure, or slow in acting or speaking.

Example: Clients are hesitant about buying.

Synonyms: Uncertain, Unsure

Antonyms: Certain, Decisive

26) Dignity

Meaning: A composed or serious manner or style.

Example: He bowed with great dignity.

Synonyms: Regality, Majesty

Antonyms: Informality

27) Dissociate

Meaning: (especially in abstract contexts) disconnect or separate.

Example: the word ‘spiritual’ has become for many dissociated from religion.

Synonyms: Separate, Detach

Antonyms: Relate, Connect

28) Contribute

Meaning: Give (something, especially money) in order to help achieve or provide something.

Example: Taxpayers had contributed £141.8 million towards the cost of local services.

Synonyms: Give, Accord

29) Ethnicity

Meaning: The fact or state of belonging to a social group that has a common national or cultural tradition.

Example: The interrelationship between gender, ethnicity, and class.

30) Eloquent

Meaning: Fluent or persuasive in speaking or writing.

Example: An eloquent speech.

Synonyms: Persuasive, Expressive

Antonyms: Inarticulate

31) Concerns

Meaning: Anxiety; worry.

Example: Carole gazed at her with concern.

Synonyms: Unease, Apprehension

Antonyms: Serenity, Indifference

32) Insurgency

Meaning: An active revolt or uprising.

Example: Rebels are waging an armed insurgency to topple the monarchy.

33) Massive

Meaning: Large and heavy or solid.

Example: A massive rampart of stone.

Synonyms: Huge, Enormous

Antonyms: Tiny

34) Elevate

Meaning: Raise or lift (something) to a higher position.

Example: The exercise will naturally elevate your chest and head.

Synonyms: Raise, Upraise

Antonyms: Lower

35) Prompt

Meaning: (of an event or fact) cause or bring about (an action or feeling).

Example: The violence prompted a wave of refugees to flee the country.

Synonyms: Cause, Occasion

36) Persecuted

Meaning: subject (someone) to hostility and ill-treatment, especially because of their race or political or religious beliefs.

Example: His followers were persecuted by the authorities.

Synonyms: Oppress, Mistreat

37) Statesmanship

Meaning: Skill in managing public affairs.

Example: We need strong statesmanship and leadership.

38) Mediating

Meaning: Intervene in a dispute in order to bring about an agreement or reconciliation.

Example: Wilson attempted to mediate between the powers to end the war.

Synonyms: Arbitrate, Moderate

39) Nonchalant

Meaning: (of a person or manner) feeling or appearing casually calm and relaxed; not displaying anxiety, interest, or enthusiasm.

Example: She gave a nonchalant shrug”

40) Enviable

Meaning: Arousing or likely to arouse envy.

Example: The firm is in the enviable position of having a full order book.

Synonyms: Desirable, Attractive

Antonyms: Unenviable

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THE HINDU EDITORIAL – September 4, 2017



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