BSEC fines Rupali Insurance directors, CEO for breaching credit rating rules
According to the latest monthly enforcement report of the BSEC, 11 individuals, including directors and the chief executive officer, were each fined Tk1 lakh in March.
The securities regulator has fined the directors and top executive of Rupali Insurance Company Limited for violating credit rating regulations, highlighting ongoing concerns over compliance and governance practices in the capital market.
According to the latest monthly enforcement report of the Bangladesh Securities and Exchange Commission (BSEC), 11 individuals—including directors and the chief executive officer—were each fined Tk1 lakh in March.
The penalised persons are Mostafa Golam Quddus, Ali Ahmed, Mohammad Yonus, Quazi Moniruzzaman, KM Faruk, Abu Hena, Shaon Ahmed, Obaidul Huque, Mostafa Quamrus Sobhan, Fazlutun Nessa, and CEO Fawzia Kamrun Taniyas.
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However, Quddus, the former chairman of the company, passed away in January 2025, while some of the penalised individuals are no longer actively engaged with the company.
The BSEC said in the report that the penalty stems from irregularities related to the company's credit rating process and alleged violations of the Bangladesh Securities and Exchange Commission (Credit Rating Companies) Rules, 2022.
The regulator found inconsistencies in an agreement between the insurer and Credit Rating Information and Services Limited (CRISL), particularly the absence of a clear validity period and execution date.
Under the agreement, CRISL was responsible for conducting an initial credit rating for 2018 and surveillance ratings for subsequent years. While the firm completed ratings up to 2020, the validity of its last rating report expired on 28 November 2022.
Immediately after this expiry, Rupali Insurance entered into a new agreement with National Credit Rating Limited on 29 November 2022, and a fresh rating report was issued in December based on updated financial statements.
The BSEC concluded that engaging a new rating agency without formally terminating the previous agreement or securing regulatory approval breached rules governing the continuity and termination of credit rating engagements.
The rules require that once a rating agreement is executed, it must continue through the initial rating and three consecutive surveillance ratings unless formally terminated with the commission's approval.
During the hearing, Rupali Insurance and the accused individuals contested the allegations, arguing that the agreement with CRISL had naturally expired rather than being terminated. They also claimed the previous agency failed to deliver within the stipulated timeframe, necessitating a new rating to meet regulatory and financial obligations.
Despite these arguments, the BSEC upheld its findings and imposed penalties, reinforcing its stance on strict compliance with regulatory frameworks.
