Regulatory Alerts2021-09-24 | Circular No. 8 of 2021Recognition of Lanka Rating Agency Ltd as an Acceptable Credit Rating Agency
The Central Bank of Sri Lanka recognizes Lanka Rating Agency Ltd as an acceptable External Credit Assessment Institution across key regulatory frameworks for licensed finance and specialized leasing companies. This designation validates LRA’s credit ratings for capital adequacy calculations, credit facility classification, and foreign currency borrowing assessments. Consequently, the Central Bank updates Table 5 to align LRA’s rating notations with Fitch and ICRA for computing total risk-weighted assets.
CENTRAL BANK OF SRI LANKA DEPARTMENT OF SUPERVISION OF NON-BANK FINANCIAL INSTITUTIONS
24 September 2021 CIRCULAR No. 08 of 2021
RECOGNITION OF LANKA RATING AGENCY LTD AS AN ACCEPTABLE CREDIT RATING AGENCY
The Central Bank of Sri Lanka recognizes Lanka Rating Agency Ltd (LRA) as an acceptable External Credit Assessment Institutions for the following purpose,
i. Circular No.01 of 2018 - Credit Ratings; ii. Finance Business Act Directions No.03 of 2018 – Capital Adequacy Requirement for Licensed Finance Companies (LFCs) and Finance Leasing Act Directions No.03 of 2018- Capital Adequacy Requirements for Specialized Leasing Companies (SLCs); iii. Finance Business Act Directions No. 01 of 2020 – Classification and measurement of credit facilities and Finance Leasing Act Directions No.01 of 2020 – Classification and measurement of credit facilities; iv. Finance Business Act Directions No.04 of 2021 – Foreign Currency Borrowings and v. Other related regulatory requirements pertaining to LFCs ad SLCs.
Accordingly, Table 5 under the item No .2.3 of Part 2- Computation of Total Risk Weighted Assets of Schedule I of the Finance Business Act Directions No.03 of 2018 – Capital Adequacy Requirement for LFCs and Finance Leasing Act Directions No.03 of 2018- Capital Adequacy Requirements for SLCs is revised as in Annex.
(Signature) J P Gamalath Director, Department of Supervision of Non-Bank Financial Institutions, Central Bank of Sri Lanka
Table 5 - Mapping of Notations of the Credit Rating Agencies in Sri Lanka
| Fitch Rating Lanka | ICRA Lanka Limited | Lanka Rating Agency Limited | Rating Scale for Capital Ratios |
|---|---|---|---|
| AAA (lka) | (SL) AAA | AAA | AAA |
| AA+ (lka) | (SL) AA+ | AA+ | AA+ |
| AA (lka) | (SL) AA | AA | AA |
| AA- (lka) | (SL) AA- | AA- | AA- |
| A+ (lka) | (SL) A+ | A+ | A+ |
| A (lka) | (SL) A | A | A |
| A- (lka) | (SL) A- | A- | A- |
| BBB+ (lka) | (SL) BBB+ | BBB+ | BBB+ |
| BBB (lka) | (SL) BBB | BBB | BBB |
| BBB- (lka) | (SL) BBB- | BBB- | BBB- |
| BB+ (lka) | (SL) BB+ | BB+ | BB+ |
| BB (lka) | (SL) BB | BB | BB |
| BB- (lka) | (SL) BB- | BB- | BB- |
| B+ (lka) | (SL) B+ | B+ | B+ |
| B (lka) | (SL) B | B | B |
| B-(lka) & Lower | (SL) B- & Lower | B- & Lower | B- & Lower |