Atiur stresses credit rating

Bangladesh Bank Governor Atiur Rahman yesterday said nearly 20,000 medium and large companies have to be rated to comply with Basel II regulations.
"Banks have to cover higher risks if their clients are not rated by an external credit rating agency," Rahman told the inauguration of National Credit Ratings Ltd at Pan Pacific Sonargaon Hotel in Dhaka.
He said a rated company has to spend less on commissions or bank charges to open LCs, and for settlements. "It will also help reduce the cost of doing business."
The number of raters reached three with this new firm, following CRISL and CRAB.
More than 10 firms were vying for licences from the regulator after the central bank set a guideline for the credit rating for the big clients of a bank, as a norm under Basel II regulations.
Experts favour the existence of more such firms in the market to facilitate implementation of the Basel II norms by the central bank, particularly in hundreds of bank clients.
However, the existing two firms oppose the entry of new players, fearing a drop in the quality of rating.
Officials of CRISL and CRAB said the entry of more rating agencies will result in stiff competition.
The gross revenues of the two agencies were Tk 2.14 crore and Tk 1.37 crore in 2008.
Khondkar Ibrahim Khaled, chairman of newcomer National Credit Ratings Ltd, presided over the programme. Commerce Minister Faruk Khan was present as chief guest.
Khan hopes the new rating company will help ensure accountability and transparency in the financial sector.
"It will also have an impact on reducing loan defaults."
AK Azad, president of Federation of Bangladesh Chambers of Commerce and Industry, expressed his concerns over volatility in the stockmarket. The way the market is behaving now, he fears that many investors may lose their money.
Khaled requested the government to make credit rating mandatory for all the listed companies, so that the investors can get reliable information easily.