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What Experts Think of BRICS Rating Agency

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The proposed BRICS agency was discussed by participating executives in a seminar at the BRICS trade fair

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When leading executives came for the Seminar on Financial Services Cooperation amongst BRICS countries at the BRICS trade Fair, they discussed the nuances and modalities of the proposed BRICS Rating Agency, International Payment Card System and Sustainable Financing.

Each of them shared some interesting viewpoints in favour of this proposed rating agency. Here is what they said while discussing the proposed BRICS Rating Agency and the various nuances for its formation which included need for such an agency, services offered ownership of the agency, regulatory framework and jurisdiction.

Naina Lal Kidwai, Chairperson, BRICS Business Council Financial Services Working Group, thinks that infrastructure financing is a pre-requisite for economic growth of any country and BRICS. She said that the New Development Bank’s effort for loan transfer for renewable energy development was commendable. She also highlighted the objective of the NDB institute as infrastructure development amongst BRICS and said that the purpose of NDB institute is to act as a think tank for BRICS group.

BRICS rating agency would not only increase competition but also give better quality outcome, feels Gert Gouws, Divisional Executive Deal Support and Post Investment, Industrial Development Corporation of South Africa.

Alexey Kechko, CEO, Sberbank, India called it the need of the hour. He said that there is a need to harmonize regulation which is a long-term process. He called for the need to deliberate on the business model and set a higher bar on regulation and governance at the board level to ensure success. He went on to say that the BRICS rating agency should be financed primarily through governments in the initial stage since it would be a developmental project.

Anatoly Valetov, Deputy Head of the Department for External Economic and International Relations of Moscow, stressed upon ‘credibility’ and said that it is the most important element for any rating agency. He also mentioned that an index is a better parameter than rating as it will provide predicative power and better management.

Commenting on the BRICS Rating Agency A P Hota, Managing Director & CEO, National Payments Corporation of India (NPCI) said that the idea of New International Payment Card System (NIPCS) for BRICS has been introduced under Russian Presidency. The card payment system is a highly standardized one. The discussion has been to build a system without the international card schemes – VISA and MASTER. There are two sides to it, the card issuing scheme and the card acceptance scheme. The acceptance for VISA and MASTER worldwide is the maximum. In recent years, China Union Pay has overtaken VISA in close acceptance level worldwide. Many countries have their own system. India introduced RuPay in 2012 and it is now the largest card scheme in India with a market share of around 42 per cent. RuPay is accepted everywhere in India. Internationally they have a tie-up with Discover and Diners cards. The creation of acceptance footprint is very important.

Deliberating on the need of having a common card platform for BRICS Alexey Kazarstev, PL Cards and Financial & Banking Association of Euro-Asian Cooperation from Russia said, “Firstly, commission can be removed. Secondly, security information would remain within the countries and finally, capitalization fee would be twice less than VISA. If this New International Payment Card system fructifies, it will be of great profit. All the domestic payment cards will be included.”

The session also deliberated on the possibility of the plastic money giving way to mobile banking. The panelists agreed in the changing times mobile banking will definitely take over but cards will still remain relevant.

Tags : BRICSbrics trade fair delhibrics trade fair discussiondigital paymentsfinancial inclusionmobile paymentsmobile wallets
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