B Mirror Report: The Bangladesh Securities and Exchange Commission (BSEC) has imposed financial penalties on 11 directors and the chief executive officer (CEO) of Rupali Insurance Company Limited for failing to comply with credit rating regulations.

According to the regulator’s latest monthly enforcement report, each of the 11 directors and the CEO has been fined Tk 100,000 for violating rules related to credit rating compliance. The penalties were enforced in March as part of BSEC’s efforts to ensure good governance and transparency in the capital market.

The penalized individuals include Mostafa Golam Kuddus, Ali Ahmed, Mohammad Yunus, Kazi Moniruzzaman, KM Faruk, Abu Hena, Shawon Ahmed, Obaidul Haque, Mostafa Kamrul Sobhan, Fazlutun Nesa, and CEO Fawzia Kamrun Tania. Former chairman Mostafa Golam Kuddus passed away in January 2025.

BSEC found that the company was involved in irregularities related to the credit rating process, violating the Bangladesh Securities and Exchange Commission (Credit Rating Companies) Rules, 2022. Specifically, inconsistencies were identified in the agreement terms and timeline with Credit Rating Information and Services Limited (CRISL).

The investigation revealed that Rupali Insurance had an agreement with CRISL to conduct surveillance ratings from 2018 onward. Although ratings were completed up to 2020, the company entered into a new agreement with National Credit Ratings Limited in November 2022 immediately after the previous rating expired without following proper regulatory procedures.

Under existing rules, once a rating agreement is executed, it must remain valid for the initial rating and three consecutive surveillance ratings. Appointing a new rating agency without prior approval from BSEC or formal termination of the previous agreement constitutes a clear violation of securities laws.

During the hearing, the company argued that the earlier agreement had expired and that the previous agency failed to deliver reports on time, prompting the new contract. However, BSEC did not accept this explanation and upheld the penalties.

Market insiders believe such enforcement actions, especially towards the end of the fiscal year, will help restore discipline in the capital market. Ensuring the reliability of financial disclosures and credit ratings is expected to benefit general investors and strengthen market confidence.