B Mirror Report :  The stock market regulator, the Bangladesh Securities and Exchange Commission (BSEC), has imposed heavy fines on two credit rating companies for violating regulations. The two firms are Argus Credit Rating Services Limited and National Credit Rating Limited. Each company has been fined Tk 500,000, amounting to a total of Tk 1 million, for breaching rules governing the credit rating process. Details of the penalties were disclosed in BSEC’s enforcement report for December.

The allegation against Argus Credit Rating Services was raised by National Credit Rating Limited itself. According to the complaint, National Credit Rating had entered into a rating agreement with Padakkhep Manobik Unnayan Kendra (PMUK) on April 11, 2019. Under existing laws, after an initial rating, the same credit rating agency is responsible for conducting surveillance ratings of that institution for the following three years. However, without obtaining prior approval from the BSEC, PMUK entered into a new agreement with Argus Credit Rating and completed the rating, which is punishable under the law. A BSEC investigation found the allegation to be true, leading to a fine of Tk 500,000 against Argus.

Interestingly, National Credit Rating Limited itself has also been penalized for a separate irregularity. The complaint against the company was filed by Credit Rating Information and Services Limited (CRISL). According to the allegation, CRISL had an existing contract to rate Rupali Insurance Company. However, in violation of that agreement, the insurance company obtained a new rating from National Credit Rating. BSEC’s investigation revealed that National Credit Rating knowingly violated the rules by issuing the rating.

BSEC sources said the strict action was taken for violations of the Credit Rating Companies Rules, 1996. To ensure transparency in the capital market and protect investors’ interests, it is essential to curb such unethical competition. The fined companies have been instructed to deposit the penalty amounts promptly into the government treasury in cash or by cheque. Market observers believe that the BSEC will take more stringent measures during the current fiscal year to restore discipline in the market.