Bangladesh Rating Agency Limited (BDRAL) has been found guilty for leaking financial information abroad, grossly violating the licence conditions issued by Bangladesh Securities and Exchange Commission (BSEC).
A Bangladesh Bank investigation report has recently detected gross irregularities, which also includes leaking financial information, committed by the rating agency. The investigation was conducted on June 8-9 this year.
According to the Bank Company Act 1991, restriction has been imposed on leaking information, documents and records of banks outside of the country in any manner.
The BDRAL, however, stated that the activities on exchange of information supply are approved by its parent company and also by Register of Joint Stock Companies (RJSC), according to the investigation report.
The investigation report noted that BDRAL was instructed to use local database to preserve and control information but the agency used the database, which was centrally preserved and controlled by New Delhi, India. As a result, the agency does not have any local control on the information system.
The BDRAL stated in the report that it would set up a server locally by next six months.
The company has been leaking information of the banks to the Indian business enterprises. Against such a backdrop, the central bank made a policy decision to cancel the license of the agency, said a senior executive of Bangladesh Bank.
But the decision could not be implemented as a section of a high official of the central bank strongly opposed the decision.
As contacted Bangladesh Bank governor Atiur Rahmna said some irregularities were found in the BDRAL rating activities. The central bank would take action against the agency as per bank company act.
In the ownership structure of BDRAL, nine banks and financial institutions share, which bias the rating activities of the company, said the report.
BDRAL evaluated the clients of NCC and MTB, though these two banks holds 5% and 4% respectively share in the respective rating company.
The rating agency licensed only for SME rating but the central bank investigation found that the company has rated a corporate client named Integra International, which was not under SME. BDRAL Chief Operating Officer Abhijit K Saha denyed to make any comments in this regard.