Credit Rating Agency of Bangladesh Ltd. is a credit rating company in Bangladesh.

It was incorporated as a public limited company under the Registrar of Joint Stock Companies in August 2003 and received its certificate for commencement of business in November 2003. It was granted a licence by the Securities & Exchange Commission (SEC) of Bangladesh for operating as a credit rating company in February 2004. The formal launching of the company was held on 5 April 2004. Company Profile Republic Insurance Company Limited (RICL) is one of the reputed and well established general insurance companies in the countrys private sector. Republic Insurance Company Limited has been incorporated on 18.05.2000 as public limited company under the companies act 1994 with a paid up capital of Tk. 6.00 crore. It joined the fraternity of insurance in Bangladesh under insurance act 1938 to transact all classes of general insurance business i. e. Fire, Marine Cargo, Marine Hull, Motor, Engineering, Miscellaneous, Burglary, Cash in Safe, Cash in Transit, Cash on Counter, Fidelity Guaranty. Workmens Compensation etcetera since inception of the Company. The Company has been operating its business through 20 Branches located all over Bangladesh Republic Insurance Company Limited has been awarded 'BBB3' (pronounced triple B three) rating in the long term and "ST-3" rating in the short term for the year 2006 Credit Rating of the Company has been rated by Credit Rating Agency of Bangladesh Limited (CRAB). REPUBLIC INSURANCE COMPANY LIMITED is privileged to be a company that meets the needs of people in destitute. A company that goes all the way to achieve its goal. We are a company with youthfulness, vigor, devotion experiences and specialized knowledge. The management of the company includes professionals of excellence, top people of trade and industry, chartered accountants. Our in house experts are trained at home and abroad. Vision Our objective is to create a meaningful organization with sustainable growth. We aim to achieve new heights in the world of competitiveness in insurance. We believe in qualitative growth, balanced with market profitability. Our constant endeavor is to achieve customer satisfaction with consistent quality service with exemplary corporate responsibility. Our Mission Our mission is to maximize long-term shareholders value through clients' contentment and employees' commitment to excellence. Our strength Our strength is constant pursuit of appropriate strategies and human resource development that have made the company one of the leading insurer of Bangladesh since inception.

Our Beliefs Company's all activities are centered with utmost satisfaction of the clients. The company believes that it has the ability to fulfill the clients' needs based on risk management, security, minimum cost and personalized services.

CRAB
CRAB is an independent and professional company established in technical collaboration with ICRA Ltd (Hyperlink) of India. CRAB is a leading provider of investment information and credit rating services in Bangladesh. CRABs shareholders include individuals and institutions including Investment Corporation of Bangladesh (ICB). and IDLC. To serve to the growing market demands, CRAB has been proactive in widening its service offerings, executing assignments including credit ratings, equity ratings, project ratings, performance grading, advisory services and mandated studies in different industrial sectors.

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Credit Rating Agency of Bangladesh Ltd. (CRAB) was incorporated as a public limited company under the Registrar of Joint Stock Companies in August 2003 and received its certificate for commencement of business in November 2003. It has been granted licence by the Securities & Exchange Commission (SEC) of Bangladesh for operating as a credit rating company in February 2004. The formal launching of the company was held on 5 April 2004.

Our Services Rating Services Ratings, usually expressed in symbols, are a simple and easily understood tool helping the investor to make judgments on investment decisions in different securities including debt and equity instruments on the basis of their underlying quality. More.... Grading More.... Advisory More.... Services Services

CRAB is equipped to offer specialised evaluation methodologies addressing exclusive and area specific requirements under the umbrella of Grading services.

The Advisory & Consultancy Services will offer wide ranging management advisory services which include strategic counselling, restructuring.

Usefulness of Rating Benefits to the Issuers/Companies Credit Rating of an issue would ensure due compliance with the relevant legal regulatory provisions of the Securities & Exchange Commission and Bangladesh Bank. CRAB opinion would help the issuer company to broaden the market for their instruments. As name recognition is replaced by objective opinions, the issuer company may access the securities market more comfortably. Credit rating may help in stabilising issuers access to the market even when the market price of listed equities is relatively unfavourable in the prevailing market conditions. Credit ratings of Entities would confer upon the companies a greater confidence of the market and enhance a greater access to the financing sources.

Values to the Investors & Creditors : Credit rating gives market participants timely access to unbiased, objective, independent, expert, professional opinion on the quality of securities in a user friendly manner that may be relied upon for investment decisions Rating opinion would facilitate the investors to decide their portfolios by choosing investment options in the market according to their profiles and preferences. Credit rating would effect significant contribution towards developing the stock market investor confidence and enhancing the quality and perfection of the securities market, through provision of credible information for guidance of institutional and individual investors.

Values to the Economy & the Capital Market : Assists in qualitative development of the money and capital markets and enhancement of transparency of financial information and governance of the corporate sector in Bangladesh. Credit rating assists the regulators in promotion and enhancement of the precision of the financial markets.

The central bank has allowed two credit rating agencies for working as external credit assessment institutions (ECAIs) to assess credit risks in line with the Basel-II framework, officials said Wednesday. Two local credit rating agencies - Credit Rating Information and Services Limited (CRISL) and Credit Rating Agency of Bangladesh (CRAB) - have been recognised as ECAIs. "All the scheduled banks operating in Bangladesh may nominate any or both the rating agency or agencies for their own and counterparty credit rating for the purpose of calculating risk weighted assets (RWA) against credit risk under standardised approach of risk based capital adequacy for banks," the central bank said in its circular, issued Wednesday. "The mapping of CRISL and CRAB rating with the central bank rating grade has already been set to calculate the RAW," a senior official of the Bangladesh Bank (BB) told the FE. He also said the central bank will calculate the RWA on the basis of two rating agencies reports. "It has been decided to use standardised approach for calculating RWA against credit risk, credit rating is to be determined on the basis of risk profile assessed by the ECAIs duly recognized by the central bank," the BB official added.
Requirements for Rating A. The Credit Rating Companies Rules 1996 issued by the Securities & Exchange Commission of Bangladesh requires that the following instruments be rated prior to making issuance, and that the information on rating be incorporated in the prospectus of offer documents : Public Offer of all Debt Instruments: Bond, Debenture, Commercial Paper, Structured Finance (Asset/Mortgage Backed Securities), and Preference Shares. Public Issue of shares at a premium

Issue of Right Shares of a public company at a premium

B. SEC (Asset Backed Security Issue) Rules, 2004 requires that the Credit Rating Report for the asset pools to be securitized be compiled along with the application for consent of the commission for issuance of Asset Backed Securities

C. Bangladesh Bank through its circulars requires mandatory credit rating for the followings : Initial Public Offerings of all Commercial Banks Initial Public Offerings of all Non Banking Financial Institutions Rating of all Commercial Banks on an annual basis with arrangement for continuous surveillance D. Office of the Chief Controller of Insurance through its circular require mandatory rating for the followings: General Insurance Companies on an annual basis Life Insurance Companies on biennial (once in every two years) basis
Crab Rating Services

CRAB is a full service credit rating agency offering ratings of all kinds of financial instruments and entities including those required by regulatory authorities. Our services cover ratings of securities issued by manufacturing companies, corporate bodies, commercial banks, non-bank financial institutions, investment banks and mutual funds, among others. The obligations include long term instruments such as bonds and debentures, medium term instruments such as fixed deposit programmes, and short term instruments such as commercial papers. CRAB also offers ratings of structured obligations and sector specific debt obligations such as instruments issued by Power, telecom and Infrastructure companies. The other services offered include Credit Assessment of large, medium and small scale units for obtaining specific lines of credit from commercial banks, financial institutions and financial services companies. CRAB offers the following Rating Services:

Entity Ratings Financial Institution Ratings Corporate Debt Ratings Equity Ratings (Initial public Offerings and Right Offerings) Structured Finance Ratings Insurance Companies Rating/Claims Paying Ability Rating Mutual Funds Schemes Rating Corporate Governance & Stakeholder Value Addition Rating Clientele Rating for Banks/Financial Institutions Other Rating Services

Entity Ratings : Entity ratings are a measure of a companys intrinsic ability and overall capacity for timely repayment of its financial obligations. They are mandatory ratings required for any regulatory compliance or voluntary ratings that may be sought by companies to enhance corporate governance and transparency. These ratings are useful for benchmarking a company against its peers, enhancing investors confidence, market profiling, reducing time for future debt ratings, enhancing a companys standing for counterparty risk purposes and facilitating credit evaluation for bank borrowings and bank lines Back to Top

Financial Institution Ratings : These ratings will assess the creditworthiness of financial institutions, i.e. commercial and merchant banks, non banking finance companies, housing finance companies etc. While each of these entities have the same function, i.e. leverage on own funds and lend to others on a cost plus basis, there are significant differences in terms of scale of operations, products and services offered, product delivery, regulatory aspects, and their internal control systems. Ratings of

financial institutions focus on the risks that can possibly affect the operations of a finance company - operating risks, financial risks and management risks. Back to Top

Corporate Debt Ratings : Such ratings specifically assess the likelihood of timely repayment of principal and payment of interest over the term to maturity of such debts as per terms of the contract with specific reference to the instrument being rated. A missed or delayed payment by an issuer in breach of the agreed terms of the issue is considered as default. The rating is based on an objective analysis of the information and clarifications obtained from the issuer, as also other sources considered reliable. Back to Top

Equity Ratings (Initial public Offerings and Right Offerings) : Equity rating makes assessment of the relative inherent quality of equity reflected by the earnings prospects, risk and financial strength associated with the specific company. The rating is not intended to predict the future market price of the stock of a company, but to evaluate the fundamentals of a company, which ultimately act as important inputs in the price behaviour of the stock of such a company over the medium term and long term. In the short term, the rating helps in reconciling the market sentiment with respect to the stock of a company to the long term fundamentals as reflected by the equity grade. Back to Top

Structured Finance Ratings : ( Included under this category will be asset backed securitisation, mortgage backed securitisation, future flow transactions etc) Structured Finance Ratings are opinion on the likelihood of the rated structured instrument servicing its debt obligations in accordance with the terms. An SFR is generally different from

the corporate Credit Rating of the originator and is based on the risk assessment of the individual components of the structured instrument. These components include legal risk, credit quality of the underlying asset, and the various features of the structure. Back to Top

Insurance Companies Rating/Claims Paying Ability Rating : Such ratings assesses the ability of the insurers concerned to honour policy-holder claims and obligations on time. Rating provides an opinion on the financial strength of the insurer, from a policy-holder's perspective which may act as an important input influencing the consumer's choice of insurance companies and products. The rating process involves analysis of business fundamentals, competitive position, franchise value, management, organisational structure/ownership, and underwriting and investment strategies. The analysis also includes an assessment of company's profitability, liquidity, operational and financial leverage, capital adequacy, and asset/liability management method. Back to Top

Mutual Funds Schemes Rating : Mutual Funds Schemes rating is designed to provide Investors, Intermediaries and Fund Sponsors/Asset Management Companies with an independent opinion on the performance and risks associated with various Mutual Fund Schemes. Funds ratings incorporate various qualitative and quantitative factors affecting a fund's portfolio. Such analyses focus on the resilience to economic changes, assessing asset quality, portfolio diversification and performance, and liquidity management. Back to Top

Corporate Governance & Stakeholder Value Addition Rating : Such rating assesses the level to which an organisation accepts and follows the codes and guidelines of corporate governance practices, reflected into the distribution of rights and

responsibilities among different participants in the organisation such as the Board, management, shareholders and other financial stakeholders and the rules and procedures laid down and followed for making decisions on corporate affairs. Back to Top

Clientele Rating for Banks/Financial Institutions : Clientele Rating service has been designed to assist the management of the loan portfolios of banks/financial institutions by bringing in the present and prospective clients under continuous evaluation and monitoring of CRABs rating unit. Clientele rating provides banks/financial institutions on a continuous basis with opinions on the relative credit risks (or default risks) associated with the existing and/or proposed loans of the clients. Back to Top

Other Rating Services : CRAB performs other rating assignments as requested by clients or required by regulatory authorities.

RATING PROCESS

Rating is an interactive process with a prospective approach. It involves a series of steps. The main steps are described as follows:

(a)

Rating Request:

Ratings in CRAB are usually initiated on formal request (or Mandate) from the prospective Issuer. An undertaking is also obtained on a Taka 150 non-judicial Stamp Paper before commencement of a Rating assignment; which spells out the terms and conditions of the engagement of credit rating agency.

(b)

Rating Team:

The Rating team usually comprises two members. The composition of the team is based on the expertise and skills required for evaluating the business of the Issuer. The team is usually led by the lead analyst with adequate knowledge of the relevant industry / instrument to be Rated.

(c)

Role of the Lead Analyst:

The lead analyst shall arrange to finalize the Rating report and send the same to the Rating Committee members. The lead analyst shall arrange to make a presentation before the Rating Committee. The lead analyst will make sure that all the relevant and material issues that may have an impact on the credit quality of the issuer (including, but not limited to those which are related to the programme being Rated) are presented before the Rating Committee for discussion. The lead analyst will ensure communication of the Rating decision to the Issuer and initiate all the necessary actions consequent to the reaction of the issuer depending on the circumstances.

(d) Information Requirements:

Issuers are provided with a list of information requirements and broad framework for discussions. These requirements are derived from the experience of the Issuers business and broadly conform to all the aspects, which have a bearing on the Rating.

(e) Secondary Information:

CRAB draws on the secondary sources of information including its own in-house research and information obtained through meetings with the Issuers bankers, auditors, customers and suppliers among many other relevant market participants. CRAB also has a panel of industry experts who provide guidance on specific issues to the Rating team. The secondary sources generally provide data and trends including changes in industry structure, sector outlook, global trends and government policies, etc. for the industry.

(f) Management Meetings and plant visits:

Rating involves assessment of number of qualitative factors with a view to estimate the future earning prospects of the Issuer. This requires intensive interactions with the Issuers management specifically with a view to understanding the business plans, future outlook, competitive position and funding policies, etc.

(g) Other Meetings:

The CRAB analyst team may also decide to meet the auditors (accounting policies followed, quality of internal controls, standard of disclosures, etc.), bankers / lenders (relationship, reputation, dealings in the past in respect of timeliness of servicing obligations) lawyers (if there are major litigations pending which may have serious impact on credit quality), trade union leaders (if industrial relations is a sensitive issue), key functional executives as well as a few investors, customers and suppliers, depending upon the circumstances to get a direct feedback from different stakeholder.

(h) Meeting with the Issuers CEO /CFO:

This would be a very important meeting (usually, the last meeting) when the Rating team would discuss all the critical issues / findings that may impact the Rating decision with the CEO / CFO of the Issuer (in the absence of CEO / CFO, with a senior executive nominated by the Issuer for this purpose).

(i) Internal Review Committee Meeting

Once the draft report is prepared by the Analysts team, it is placed before the Internal Review Committee Meeting. The committee comprise of senior analysts. The committee reviews the draft rating report and analysis made by the analysts. Committee also reviews the due diligence, documents, meetings, site visits etc.

(j) Rating Committee Meeting:

The authority for assigning Ratings is vested in the Rating Committee of CRAB. The Rating reports are sent by the analyst team in advance to the Rating Committee members. A presentation about the Issuers business and the management is made by the Rating team to the Rating Committee at the meeting. All the key issues are identified and discussed at length during the meetings and all relevant issues, which influence the Rating, are considered. The differences if any arise during the discussion are taken note of. Finally, a Rating is assigned either by a consensus or by majority votes.

(k) Surveillance:

It is obligatory on the part of CRAB to monitor Accepted Ratings (including the Ratings treated as Deemed Acceptance) over the tenure of the Rated instrument or till any amount is outstanding under the programme(s) Rated. The Issuer is bound by the agreement to provide information to CRAB to facilitate such monitoring. In case the Issuer do not co-operate by way of providing information, etc, for the purpose of surveillance, CRAB may on its own carry out the surveillance on best efforts basis based on the available information and possible interactions after giving the Issuer adequate notice requesting him to co-operate. The Ratings are generally reviewed every year, unless the circumstances of the case warrant an earlier review due to changes in circumstances or major developments that were not anticipated / factored in the Rating decision.

The Ratings may be Upgraded, Downgraded or retained after the surveillance. The CEO, at his sole discretion, may give one opportunity to the Issuer to represent his case if he is not satisfied with the Rating decision after the surveillance process. However, the Issuer would not have any option of not accepting the Rating after the surveillance.

Grading Service CRAB is equipped to offer specialised evaluation methodologies addressing exclusive and area specific requirements under the umbrella of Grading services. The services are meant for evaluation of different activities and entities belonging to multi-faceted industries. CRABs grading service is designed to provide an objective, credible and independent opinion on the quality of entities being examined with specific reference to parameters and issues unique to the sector/sub-sector. Construction and real-estate development activities, hospitals and diagnostic services, are examples of such sector/sub-sectors. CRAB intends to establish strategic association with reputable and specialised bodies associated with the sector/sub-sector to develop and offer specialised grading products. The following grading methodologies will illustrate the scope: A. Real Estate Developers Grading : Designed to make the investors (end user/buyer of property) aware of the risks involved in the developers ability to deliver as per specified terms and quality parameters and transfer of ownership on time. Also facilitates the overall growth of the real estate sector by providing the developers with guidance and incentives to conform to legal requirements and fair trade practices. B. Health Care Institutions Grading : Evaluates capability of the diagnostic and treatment providers to deliver quality care from the users (patients) perspective. Grading is designed to evaluate the two most important dimensions of care, viz. technical and interpersonal care, reflecting both infrastructure facilities and processes. C. Other Grading Services : CRAB is working in developing more grading services to other related areas and is equipped to design new services upon requirements of the clients. Information Service

CRAB provides information service in the form of database, financial analysis, market analysis, market survey etc. The service is customised to specific need of the clients. For further information please contact through email or telephone. Credit Rating Agency of Bangladesh Limited (CRAB) Sena Kalyan Bhaban, Suite No: 403, Floor : 4th 195 Motijheel Commercial Area, Dhaka 1000, Bangladesh Telephone: 88-02-9571497, 9571238, 7175368 Fax: (8802)9563837 Email : info@crab.com.bd

Chittagong Office
C & F Tower, Level : 4, 1222 Sk Mujib Road Agrabad C/A, Chittagong-4100 Phone No:(88031)251-8392 Fax: (88031) 2516694, Email : ctg@crab.com.bd web : www.crab.com.bd, www.crabrating.com

Rating Methodology:
Bank rating Methodology Financial rating Methodology Corporate Rating Methodology General insurance rating Methodology Life insurance Government owned Enterprise Rating Methodology: Securitisation Rating Methodology

DEED OF AGREEMENT

CREDIT RATING & SURVEILLANCE SERVICE FOR ABC

ABC, Address represented by its Managing Director/------------ and CREDIT RATING AGENCY OF BANGLADESH LTD (CRAB), 195 Motijheel Commercial Area, Dhaka 1000, represented by its Managing Director, do hereby affirm, pledge and agree to undertake and abide by the stipulations, terms and covenants of this Agreement as stated hereinafter.

1.

That the Management of ABC would like to rise finances for its project and requires Credit Rating for the purpose. ABC requests Credit Rating Agency of Bangladesh Limited (CRAB) to provide rating to the proposed financing. That CRAB has agreed to undertake the credit rating assignment of the project which would include initial rating and rating surveillance in the future period under agreement. That in pursuant with SEC regulations ABC must attain the rating surveillance of the concerns under agreement for the next three years (based on audited financial statements of the concerns for .........., ......., and ................) from CRAB, during which period the agreement cannot be terminated without prior approval of SEC. That the professional fees for the initial rating assignment and annual surveillance have been agreed to be TK ___ only and TK ___ only plus tax and VAT at appropriate rates. ABC agrees to remit the initial Rating Fees in two equal instalments of TK ___ each through crossed cheques in favour of Credit Rating Agency of Bangladesh Limited. The first instalment will be payable on the time of appointment and the residual on completion of the assignment and before delivery of the rating report to ABC. The annual surveillance fees will be payable on completion and before delivery of annual surveillance report. That the Rating would essentially entail a detailed study, understanding and evaluation of the legal, technical, operational and financial information relating to the project. ABC agrees to furnish all the papers, information, explanations and clarifications, as may be required by CRAB for carrying out the rating assignment. Such materials and information shall become property of CRAB subject to these being used only for the purpose of the rating of the project. That ABC agrees to co-operate with CRAB in all respects so as to enable CRAB to arrive at a true and fair rating of the project by ensuring the completeness, accuracy and validity of the

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operational, technical and financial information being provided as well as the prompt timeliness of the requisite information. 7. That ABC agrees to communicate to CRAB in writing, within two days of the rating award being assigned, its decision with regard to the acceptance and/or use of the rating. If no communication is made by ABC within the stipulated time frame, the rating will be deemed as accepted. ABC confirms that unless the rating is accepted, it shall not use the rating award for any purpose or in any manner whatsoever. That once the rating is accepted, it would confer upon CRAB the right to publish the same. Also CRAB will have the right to publish any revision/reaffirmation of the rating based on periodic surveillance over the life of the rated financing. That if the rated financing is not arranged within a period of six months from the date of the letter communicating the rating, the rating would stand withdrawn unless revalidated before the expiry of six months. That ABC agrees to inform CRAB before the disbursement of the financing if there are any changes in the terms and conditions or size of the financing as incorporated in the rating report. ABC also agrees and undertakes that any such change after the rating award is assigned by CRAB would be subject to CRAB s review and may even result in a subsequent change in the rating award. That CRAB will provide a reasonable opportunity to ABC to make a representation before making public the rating award. However, once such reasonable opportunity has been provided by CRAB, the decision of CRAB in respect of the rating award shall be final and binding upon ABC. That if ABC fails to render the expected level of co-operation needed to enable CRAB to carry out the rating assignment, CRAB would be entitled to carry out the rating on the basis of best available information and shall be entitled to disclose such rating award in any manner and to any organization as deemed appropriate by CRAB. That ABC agrees that CRAB may periodically publish a detailed rating rationale in its publications and may also issue a press release of the rating rationale through the media-for all ratings in use/proposed to be used. Prior to release of such information, CRAB will provide a reasonable opportunity to ABC for examining the draft of the publication material / press release so as to enable ABC to ensure that any factually incorrect or misleading information is avoided. That ABC understands that CRAB reserves the right to disclose, in the public interest, to the appropriate regulatory agencies and Government bodies, the correct position about the rating assigned by CRAB, in case of any allegation of misstatements by ABC in public documents or publicity materials about CRAB s rating awards or processes. That ABC is fully aware that CRAB does not guarantee the completeness or accuracy of the materials and information provided by ABC on which the rating is based. ABC is also aware that CRAB ratings are opinions of CRAB and do not constitute recommendations to buy, hold or sell any securities. That ABC agrees to comply with relevant obligations that may be imposed upon ABC pursuant to any regulation, notification or guidelines that may be issued by the SEC, NBR, Bangladesh Bank and other Government agencies in relation to credit rating/grading of instruments.

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That, if ABC gets listed with its equity shares or debt instruments in the stock exchanges, it will become obligatory on part of CRAB to provide Press Release to SEC and Stock Exchanges within one hour of decisions regarding ratings or ratings updates of the said securities.
That notwithstanding anything contrary to the stipulations contained in this Document, ABC agrees and undertakes that CRAB, its Directors and Executives, Rating Committee Members, and all others concerned with the rating assignment will not be responsible for consequences of any false, inaccurate or misleading information of any nature, provide by ABC to CRAB, on which CRAB may have relied in any manner whatsoever, to derive the credit rating award. The contract will be valid till 31 December 20XX from the date of signing, which may be further extended through mutual consent of ABC and CRAB.

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This STATEMENT OF UNDERTAKING is hereby executed by us on the ___ 20__, in the presence of:

For ABC

For CRAB Ltd.

______________________ Name Designation

__________________ Hamidul Huq Managing Director

WITNESSES

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