BRPD Circular No. 05: Mapping of External Credit Assessment Institutions Ratings with Bangladesh Bank Rating Grade

Website: www.bangladesh-bank.org www.bangladeshbank.org.bd Banking Regulation and Policy Department Bangladesh Bank Head Office Dhaka April 29, 2009 BRPD Circular No. 05 Date:---------------------------- Baishakh 16, 1416 Chief Executives All Scheduled Banks in Bangladesh Dear Sir, Mapping of External Credit Assessment Institutions (ECAIs) rating with Bangladesh Bank Rating Grade Please refer to BRPD Circular Number 09 dated December 31, 2008 wherein detailed guideline and reporting formats for the implementation of Basel II in Bangladesh were issued. As it has been decided to use Standardized Approach for calculating Risk Weighted Assets (RWA) against Credit Risk, credit rating is to be determined on the basis of risk profile assessed by the External Credit Assessment Institutions (ECAIs) duly recognized by Bangladesh Bank (BB).
2) From this point of view, Credit Rating Information and Services Ltd. (CRISL) and Credit
Rating Agency of Bangladesh Ltd. (CRAB) have been recognized as eligible ECAIs. All the scheduled banks operating in Bangladesh may nominate any or both the rating agency (ies) for their own and counterparty credit rating for the purpose of calculating RWA against credit risk under Standardized Approach of Risk Based Capital Adequacy for Banks.
3) The mapping of CRISL and CRAB rating with BB Rating Grade will be as follows:
BB Rating Grade Equivalent Rating of
CRISL
Equivalent Rating of
CRAB
1 AAA AAA
2 AA+, AA AA1, AA2
3 AA-, A+, A, A- AA3, A1, A2, A3
4 BBB+, BBB, BBB- BBB1, BBB2, BBB3
5 BB+, BB, BB-, B+, B, B-, CCC+, CCC, CCC- BB1, BB2, BB3, B1, B2, B3, CCC1, CCC2, 6 CC+, CC, CC-, C+, C, C-, D CCC3, CC, C, D Short-Term Rating Category Mapping S1 ST-1 ST-1 S2 ST-2 ST-2 S3 ST-3 ST-3 S4 ST-4 ST-4 S5 ST-5 ST-5 S6 ST-6 ST-6
4) Banks may use the ratings of these two rating agencies and corresponding risk weight as
mentioned in the guideline for calculating RWA for Credit Risk under Standardized Approach of Risk Based Capital Adequacy for Banks. Please acknowledge receipt. Yours sincerely, (Abu Hena Mohd. Razee Hassan) General Manager Phone: 7117825