Global agency Moody's on Tuesday upgraded India's short-term foreign currency rating from speculative to investment grade, a development which will help domestic companies to raise funds from overseas markets at better rates.

". . . there has been another upgrade by Moody's with the short-term country ceiling on foreign currency bank deposit increasing from NP (not prime) to Prime (P-3), suggesting acceptable ability to repay short-term obligations," the Finance Ministry said.

The 'P-3' ratings suggest acceptable ability to repay short-term obligations.

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The latest move comes less than a month after Moody's had upgraded the credit rating of Indian government's bonds from speculative to investment grade, a move that was expected to encourage FIIs to increase their exposure in gilts and help companies raise funds from abroad at competitive rates.

On December 20 last year, Moody's had upgraded short term government bonds denominated in domestic currency from NP not prime to P-3.

Moody's had upgraded rating on long-term government bond denominated in domestic currency from Ba1 to Baa3 or from speculative to investment grade.

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Besides, the long-term country ceiling on the foreign currency bank deposit was also upgraded from Ba1 to Baa3.

Giving rationale for the upgrade in December, Moody's had at that side said, "Diverse sources of Indian growth have enhanced its resilience to global shocks".

It had added the present slowdown "could reverse sometime in 2012-13, as inflation cools from current 9 per cent levels".

The Finance Ministry had approached the ratings agency seeking clarification regarding the 'short-term country ceiling on foreign currency bank deposit', which had not found mention in the earlier decision by Moody's.

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According to the ministry, the ratings firm has sent it a mail affirming an upgrade in that front as well.    

"The Department of Economic Affairs will continue to engage rating agencies on regular basis to impress upon them the long-term structural strengths and sound fundamentals of the Indian economy," joint secretary in the capital markets division of Thomas Mathew said.    

Presently, six sovereign ratings agencies -- Standard & Poor's, Moody's, DBRS, Fitch, Japanese Credit Rating Agency and the Rating and Investment Information Inc -- assigns ratings to India.