The Bangladesh Securities and Exchange Commission (SEC) has started inspection into the alleged ‘trafficking’ of coutnry’s thousands of financial information to a neighbouring country by the Bangladesh Rating Agency Limited (BDRAL), informed sources said.
The securities regulator’s inspection began recently following a letter of the Bangladesh Bank (BB) that earlier found a number of irregularities and non-compliances to the approval-conditions at the rating agency, sources at the SEC and BB said.
The BB conducted the special inspection in June this year, they said.BDRAL is a credit rating agency. It got license from the SEC in 2012 and ‘recognition’ from the BB in 2013 to conduct rating of only the small and medium enterprises (SMEs) in the country. Till now, it so far conducted rating of 3,000 SMEs.
Following its findings, the central bank also served a show-cause notice to the BDRAL to explain that why the BB ‘recognition’ should not be withdrwn.
In replying to the show-cause, the BDRAL on August 28 requested the central bank to allow six months to comply with the law and rules.
Then, stepping back from the move to cancel recognition, the BB allowed the six-month time and suggested the company to inform it about the compliance regularly, said the sources.
The central bank in its June inspection found that the company is using online web-based software “APLAN Sentinel Integration Project (ASIP)” to calculate rating of SME clients; both the database and website of ASIP are hosted in the neighbouring country, violating the recognition conditions.
Though there should have a service level agreement (SLA) between vendor and user to use the ASIP as per the existing provisions, BDRAL does not have any such SLA, the BB report found, adding that the company has no meaningful access and control over the ASIP.
Some others irregularities and violations include non-compliance of condition No-12 of the BB’s recognition letter, violations of BSEC rating rules and inconsistency in rating methodology with actual rating process.
The six-month deadline will end on February 28 next.