BSEC fines two credit rating companies for violating rules

The Bangladesh Securities and Exchange Commission (BSEC) has imposed fines on two credit rating companies – ARGUS Credit Rating Services Ltd and National Credit Ratings Limited – for violating regulatory provisions governing the credit rating process.

According to sources at the securities regulator, the commission fined Tk5 lakh each on the two firms. The penalties were disclosed in the BSEC's monthly enforcement report for December.

In the case of ARGUS Credit Rating Services Ltd, the action followed a complaint lodged by National Credit Ratings Limited. 

National Credit Ratings informed the regulator that it had entered into a credit rating agreement with Padakhep Manabik Unnayan Kendra (PMUK) on 11 April 2019. Under the Credit Rating Companies Rules, 1996, and the terms of the agreement, National Credit Ratings was responsible for conducting surveillance ratings for at least three years following the initial rating.

However, the complaint stated that PMUK, without obtaining prior approval from the BSEC, subsequently entered into a separate agreement with ARGUS Credit Rating Services and obtained a credit rating from the firm. 

A BSEC enquiry found the allegation to be valid and concluded that ARGUS had breached the applicable rules. As a result, the commission decided to impose a fine of Tk5 lakh on ARGUS Credit Rating Services Ltd.

Separately, the regulator also took enforcement action against National Credit Ratings Limited following a complaint from Credit Rating Information and Services Limited (CRISL). 

According to the complaint, CRISL had signed an agreement with Rupali Insurance Company to conduct a credit rating. Despite the existing agreement, the insurer reportedly obtained a rating on the same issue from National Credit Ratings.

The BSEC investigation found that National Credit Ratings had violated the credit rating rules by issuing a rating and therefore imposed a fine of Tk5 lakh on National Credit Ratings Limited.