Recent News

CRAB accredited as ECAI by Bangladesh Bank

In April 2009, Bangladesh Bank accredited Credit Rating Agency of Bangladesh Ltd as an External Credit Assessment Institution (ECAI). Under the standardized approach for calculating risk weighted assets against credit risk, the credit rating is to be determined on the basis of risk profile assessed by the ECAIs. Banks will use the ratings of the ECAIs and corresponding risk weight for calculating RWA for credit risk under the standardized approach. 

Mapping of CRAB with BB risk grade

 

BB rating grade

Equivalent rating of CRAB

1

AAA

2

AA1, AA2

3

AA3, A1, A2, A3

4

BBB1, BBB2, BBB3

5

BB1, BB2, BB3, B1, B2, B3, CCC1, CCC2

6

CCC3, CC, C, D

 

Short Term Rating

S1

ST-1

S2

ST-2

S3

ST-3

S4

ST-4

S5

ST-5

S6

ST-6

 About Basel II

 Basel II is recommendatory framework for banking supervision, issued by the Basel Committee on Banking Supervision in June 2004. The objective of Basel II is to bring about international convergence of capital measurement and standards in the banking system. The Basel Committee members who finalized the provisions are primarily representatives from the G10 countries, but several countries that are not represented on the committee have also stated their intent to adopt this framework.

 

BB, in December 2008, has issued guidelines on the New Capital Adequacy Framework (BRPD Circular 09, dated 31.12.08) to banks operating in Bangladesh, based on the Basel II framework. These guidelines inform that BB suggests implementation of Basel II with the following approaches:

i)              standardised approach for calculating RWA against credit risk

ii)             standardised approach for calculating RWA against Market Risk; and 

iii)           basic indicator approach for calculating RWA against Operational Risk

Under the standardised approach for measuring credit risks, the risk grades are determined on the basis of ratings assigned by the ECAIs.

 Risk Weights of Corporate Claims under Basel II

 

CLAIMS ON CORPORATE (excluding equity exposures)

Bangladesh Bank Rating Grade

Equivalent CRAB Rating

Risk Weight

%

1

AAA

20

2

AA1, AA2

50

3,4

AA3, A1, A2, A3, BBB1, BBB2, BBB3

100

5,6

BB1, BB2, BB3, B1, B2, B3, CCC1, CCC2, CCC3, CC, C, D

150

Unrated

125

CRAB conducted BASEL II training for Bank Alfalah

BankALfala

Credit Rating Agency of Bangladesh Ltd. conducted a training session on implementation of BASEL II for Bank Alfalah Ltd. executives at its Gulshan office. The session was organized with a view to assisting BASEL II in commercial banks, reporting under which has become a regulatory requirement by Bangladesh Bank from January 2009.

M. Tajul Islam, Senior Financial Analyst of CRAB conducted the daylong interactive training session. Majedur Rahman, Country Head of Bank Alfalah, Bangladesh inaugurated the programme Former Deputy Governor of Bangladesh Bank and Rating Committee Member of CRAB Dr. Shohrab Uddin also spoke the occasion. CRAB Vice President H S Sohrawardhi, Bank Alfalah’s Operation HeadShahab Khattak, Credit Head Mubasher Ahmed, Consumer Banking Head Tarique Afzal and other senior officials of the both organizations participated the session.

CRAB’s Senior Financial Analyst M. Tajul Islam demonstrates in the daylong training session on BASEL II implementation for Bank Alfalah executives.

Training on Rating Methodology & Framework

Recently CRAB arranged a week long training program on “Rating Methodology & Framework” which was conducted by Mr. Rohit Inamdar, Vice President of ICRA Ltd, a leading credit rating agency of India, which is also the technical collaboration partner of CRAB. The training facilitated analysts to improve their professional skills through sharing CRAB’s rating methodology with ICRA and exchange views on rating criteria.

Signing Ceremony With NRB Bank Ltd.

NRB-BANK