Credit rating: A credit rating represents the rating agency's opinion on the likelihood of a rated debt obligation being

repaid in full and on time. A simple alphanumeric symbol is normally used to convey a credit rating. Credit Rating by CRAB and CRISIL: 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 recognized 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 standardized 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 standardized 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. 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 recognized 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 standardized 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 standardized 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.

What do the various credits rating symbol: CRISIL and CRAB uses simple alphanumeric symbol to convey credit rating. CRISIL and CRAB assigns credit rating to debt obligations on three basis scales: the long term scale, the short-term scale and the fixed deposit scale. But some difference to credit rating among them for difference organization. To illustrate, CRISILs long-term credit rating scale and the description associated with each category on the rating scale is given below: Symbol (Rating category) AAA AA A BBB BB B C D
Published Date 15-Feb2011 15-Feb2011 14-Feb2011 09-Feb2011 10-Feb2011 09-Feb2011 10-Feb2011 10-Feb2011 10-Feb2011 14-Feb2011 13-Feb2011 15-Feb2011 15-Feb2011 Organization Denimach Washing Limited Doreen Hotel & Resort Limited MTS ReRolling Mills Limited Shamsul Alamin Real Estate Limited Zaber Zubair Accessories Limited M/S Janata Steel Corporation M/s. Moslem Bhuyan Artex Fabrics Ltd M/s. Promy Jute Traders Mudys Navigation Limited M/s. S. Trading Corporation A. R. Cement Mills Ltd. M/s. National Steel

Description (with regard to the likelihood of the meeting the debt obligation on time) Highest Safety High Safety Adequate Safety Moderate Safety Inadequate Safety High Risk Substantial Risk Default
Sector Corporate Others Corporate Corporate Long Term A BBB+(Indicative) AAShort Term ST-3 N/A ST-3 ST-3 Outlook Stable N/A Stable Stable Type Entity Debt Instrument Entity Entity Validity (Long) 14-Feb-12 14-Feb-12 13-Feb-12 08-Feb-12 Validity (Short) Expired N/A Expired Expired

Corporate Corporate Corporate Corporate Corporate Corporate Corporate Corporate Corporate

A+ BBB+ BBBA BBB+ BBB+ BBB+ BBB+ BBB

ST-3 ST-4 ST-4 ST-3 ST-4 ST-4 ST-4 ST-4 ST-4

Stable Stable Stable Stable Stable Stable Stable Stable Stable

Entity Entity Entity Entity Entity Entity Entity Entity Entity

09-Feb-12 08-Feb-12 09-Feb-12 09-Feb-12 09-Feb-12 13-Feb-12 12-Feb-12 14-Feb-12 14-Feb-12

Expired Expired Expired Expired Expired Expired Expired Expired Expired

15-Feb2011

M/s. Q. S. Steel

Corporate

BBB-

ST-4

Stable

Entity

14-Feb-12

Expired

15-Feb2011 17-Feb2011 17-Feb2011 22-Feb2011 22-Feb2011 23-Feb2011

M/S. Abrar Steel Sterling Styles Ltd. Sterling Creations Ltd H.P. Chemicals Limited Delta Pharma Limited Sufia Fabrics Ltd.

Corporate BBBCorporate BBB+ Corporate BBB+ Corporate A Corporate BBB Corporate A+

ST-4 ST-4 ST-4 ST-3 ST-4 ST-3

Stable Stable Stable

Entity Entity Entity

14-Feb12 16-Feb12 16-Feb12 21-Feb12 21-Feb12 22-Feb12

Expired Expired Expired Expired Expired Expired

Positive Entity Stable Stable Entity Entity

To illustrate, CRABs long-term credit rating scale and the description associated with each category on the rating scale is given below: Issue/Issuer Name Delta Brac Housing Finance Corporation Ltd(DBH) BRAC Takaful Islami Insurance Ltd Infinity Data and Power Ltd Padma Islami Life Insurance Ltd Dhaka Insurance Limited NAZ Bangladesh Ltd Northern General Insurance Company Ltd Barnali Textile & Printing Industries (Pvt) Long Term Rating AAA Short Term Rating ST-1 Date Of Rating 27/12/2011 Validty Status Rational Reports

31/12/2012 Valid

AAA BBB3 BBB3 BBB3 A3 BB1 BBB1 BBB2

ST-1 ST-3

18/09/2011 14/08/2011 19/07/2011 19/07/2011

30/06/2012 Valid 30/06/2012 Valid

Reports Reports

19/01/2012 Expired Reports 30/06/2012 Valid 30/06/2012 Valid 08/07/2012 Valid 30/06/2012 Valid 30/06/2012 Valid Reports Reports Reports Reports Reports

ST-3 ST-4 ST-3 ST-3

09/07/2011 09/07/2011 09/07/2011 02/07/2011

Ltd Central Insurance Company Ltd Matex Bangladesh Ltd Apex Lingerie Ltd A.K.M Knit Wear Ltd Neo Zipper Company Ltd Bank Alfalah Ltd J. K. Fabrics Ltd Bank Asia Ltd Al-Arafah Islami Bank Ltd F. K. Steel Corporation Dutch-Bangla Bank Ltd

A3 A1 A1 BBB1 A1 A3 BBB3 AA2 A1

ST-3 ST-3 ST-3 ST-3 ST-3 ST-2 ST-3 ST-1 ST-2 ST-4

30/06/2011 30/06/2011 30/06/2011 30/06/2011 30/06/2011 28/06/2011 28/06/2011 28/06/2011 28/06/2011 23/06/2011 23/06/2011

30/06/2012 Valid

Reports

31/12/2011 Expired Reports 31/12/2011 Expired Reports 30/06/2012 Valid 30/06/2012 Valid 30/06/2012 31/12/2011 30/06/2012 30/06/2012 Valid Expired Valid Valid Reports Reports Reports Reports Reports Reports Reports Reports

30/06/2012 Valid 30/06/2012 Valid

AA2

ST-1

How does a credit rating agency differ from a credit bureau? A credit rating agency provides an opinion relating to future debt repayments by borrowers. A credit bureau provides information on past debt repayments by borrowers. Is a credit rating a recommendation to invest in a debt instrument? A credit rating is not a recommendation to buy, hold, or sell a debt instrument. A credit rating is one of the inputs used by investors to make an investment decision. How does a credit rating differ from an audit? A credit rating agency relies on a variety of information sources, including published annual reports. An audit process is designed to detect fraud or misrepresentation of information, whereas the credit rating process is not. Does a credit rating assure repayment? A credit rating is not an assurance of repayment of the rated instrument. Rather, it is an opinion on the relative degree of risk associated with such repayment. This opinion represents a probabilistic estimate of the likelihood of default. Who pays for a credit rating? Most credit rating agencies across the world use a revenue model where the issuer pays for the credit rating. Alternative revenue models (such as the one based on investor fees) pose numerous challenges in terms of ease and practicality of implementation that have not yet been overcome. Who regulates a rating agency? The capital market regulator regulates rating agencies in most regions. In India, the

capital markets regulator, the Securities and Exchange Board of India (SEBI), regulates the rating agencies in the country. How do investors benefit from a credit rating? Credit ratings help investors facilitate comparative assessment of investment options, complement the investors' own credit analysis, and allow asset monitoring. Does the size of the rated debt obligation affect its credit rating? No. What matters is the size of the total debt in the company, and not the amount that is sought to be rated. Why do credit ratings change? Credit ratings are assigned based on certain expectations and assumptions about variables that impact the issuer's performance. However, these variables can change, causing the rated entities' performance to deviate materially from expectations. This is reflected in their changed credit ratings. What is the validity period of a credit rating? Credit ratings are assigned either to specific instruments or to the general debt obligations of issuers. CRISIL assigns credit ratings to debt obligations. A rating is valid until the rated debt obligation is fully paid. Does the minus sign in a rating symbol have negative connotations relating to the issuer's performance or its debt-servicing capability? Plus and minus symbols are used to indicate finer distinctions within a rating category. The minus symbol associated with ratings has no negative connotations whatsoever.