Thrust on credit rating for better access to finance
Sunday, 17 January 2010
FE Report
Companies should conduct credit rating for better and speedy access to finance, ensuring better pricing from financial institutions and attracting potential investors, experts said Saturday.
They made the call at a seminar on 'Importance of Credit Rating for Better Access to Finance' organised by Dhaka Bank Ltd in the capital.
Dhaka Bank managing director Khondker Fazle Rashid chaired the seminar, while Bangladesh Bank general manager Abu Hena Mohammad Razee Hassan, Bangladesh Bank Basel II cell member secretary K M Abdul Wadood and Dhaka Bank deputy managing directors Tanweer Rahim and Neaz Mohammad Khan spoke.
Khondker Fazle Rashid said credit rating provides an independent and unbiased evaluation of the creditworthiness and adequate basis for benchmarking.
"It also helps form credit history, evaluate and price the credit risks, facilitate flow of capital, indicate improved governance and transparency and facilitate independent monitoring of overall debt level and financial risks."
The Dhaka Bank chief said the borrowers also benefit from credit rating. "It acts as an important tool for borrowers to gain access to loans and debts and helps ensure better pricing or better facility from the banks and companies become more competitive in attracting both local and global potential investors."
"In future, without credit rating access to finance from financial institutions may be tough," Mr Rashid said.
Mr Rashid also pointed out that costing of credit rating is the biggest concern among the companies as many of them have found it very expensive.
In his presentation, Abdul Wadood said having a good credit rating means having access to additional facility when someone needs it.
He said segregating counterparties into good and bad is first step of risk management. "But credit ratings of all the companies should not be judged in the same tool."
"Companies with higher credit rating will be regarded as low risk. On the other hand, companies with lower credit rating will be regarded as higher risk," said Mr Wadood, also a deputy general manager of Bangladesh Bank.
The central bank official said medium and large companies and firms, as per the definition of Better Business Forum and Bangladesh Bank, would come under the system.
Razee Hassan said Bangladesh Bank has held one-to-one meeting with every banks of the country to make them aware of Basel II, as Bangladesh has entered into the risk-based capital adequacy framework regime in January this year.
He said teams from Standard & Poor and Moody's Corporation, two of the world's leading providers of independent credit ratings, would soon visit Bangladesh to determine the country's sovereign credit rating, which now stands at five.
Muzaffar Ahmed, president and chief executive of Credit Rating Information and Services Ltd (CRISL), said borrowers need the credit rating most than the financial institutions.
"The companies will not be able to grow to a large extent without credit rating," he said.
Hamidul Huq, managing director of Credit Rating Agency of Bangladesh (CRAB) and Mainuddin Monem, deputy managing director of Abdul Monem Group also spoke.
Heads and chief executives of the country's different groups took part in the event.
Companies should conduct credit rating for better and speedy access to finance, ensuring better pricing from financial institutions and attracting potential investors, experts said Saturday.
They made the call at a seminar on 'Importance of Credit Rating for Better Access to Finance' organised by Dhaka Bank Ltd in the capital.
Dhaka Bank managing director Khondker Fazle Rashid chaired the seminar, while Bangladesh Bank general manager Abu Hena Mohammad Razee Hassan, Bangladesh Bank Basel II cell member secretary K M Abdul Wadood and Dhaka Bank deputy managing directors Tanweer Rahim and Neaz Mohammad Khan spoke.
Khondker Fazle Rashid said credit rating provides an independent and unbiased evaluation of the creditworthiness and adequate basis for benchmarking.
"It also helps form credit history, evaluate and price the credit risks, facilitate flow of capital, indicate improved governance and transparency and facilitate independent monitoring of overall debt level and financial risks."
The Dhaka Bank chief said the borrowers also benefit from credit rating. "It acts as an important tool for borrowers to gain access to loans and debts and helps ensure better pricing or better facility from the banks and companies become more competitive in attracting both local and global potential investors."
"In future, without credit rating access to finance from financial institutions may be tough," Mr Rashid said.
Mr Rashid also pointed out that costing of credit rating is the biggest concern among the companies as many of them have found it very expensive.
In his presentation, Abdul Wadood said having a good credit rating means having access to additional facility when someone needs it.
He said segregating counterparties into good and bad is first step of risk management. "But credit ratings of all the companies should not be judged in the same tool."
"Companies with higher credit rating will be regarded as low risk. On the other hand, companies with lower credit rating will be regarded as higher risk," said Mr Wadood, also a deputy general manager of Bangladesh Bank.
The central bank official said medium and large companies and firms, as per the definition of Better Business Forum and Bangladesh Bank, would come under the system.
Razee Hassan said Bangladesh Bank has held one-to-one meeting with every banks of the country to make them aware of Basel II, as Bangladesh has entered into the risk-based capital adequacy framework regime in January this year.
He said teams from Standard & Poor and Moody's Corporation, two of the world's leading providers of independent credit ratings, would soon visit Bangladesh to determine the country's sovereign credit rating, which now stands at five.
Muzaffar Ahmed, president and chief executive of Credit Rating Information and Services Ltd (CRISL), said borrowers need the credit rating most than the financial institutions.
"The companies will not be able to grow to a large extent without credit rating," he said.
Hamidul Huq, managing director of Credit Rating Agency of Bangladesh (CRAB) and Mainuddin Monem, deputy managing director of Abdul Monem Group also spoke.
Heads and chief executives of the country's different groups took part in the event.