Regulatory Alerts2008-09-23
Added · Updated
Guidelines for recognition of eligible External Credit Assessment Institutions (ECAIs)
Bangladesh Bank establishes recognition criteria and mapping processes for External Credit Assessment Institutions (ECAIs) to be used under the Standardized Approach of the Basel II Risk Based Capital Adequacy framework. Eligible ECAIs must satisfy six criteria including objectivity, independence, international access, disclosure, resources, and credibility, and their ratings are mapped to risk weights based on cumulative default rates and qualitative factors. Scheduled banks are required to nominate recognized ECAIs for determining credit ratings of banking book exposures and notify Bangladesh Bank of these nominations. The guidelines also outline the application process for ECAIs, ongoing annual reviews, and specific instructions for banks regarding the use of ratings and indirect recognition.
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