1 CREDIT RATING INFORMATION AND SERVICES LIMITED

(CRISL)

CRISL is the first ever joint venture rating agency operating in Bangladesh since 1995. It is a
joint venture of Malaysia Berhad (RAM), JCR-VIS Credit Rating Company of Pakistan, few
financial institutions and a host of celebrated professionals of Bangladesh. With a license from
the Securities Exchange Commission (SEC) under Credit Rating Companies Rules 1996, CRISL
now appears as the flagship organization of Bangladesh. CRISL is a founder member of the
Association of Credit Rating Agencies in Asia (ACRAA) which is sponsored by the Asian
Development Bank, where CRISL has significant contribution towards the development of the
profession of rating agency in the Asian region. CRISL is a public limited company dedicated for
credit rating and related services and is being recognized by Bangladesh Bank as the External
Credit Assessment Institution (ECAI) to offer its services to the banking community for banking
client rating. CRISL provides its services with high business and ethical code as approved by the
International Organization of Securities Commission (IOSCO), Securities and Exchange
Commission of Bangladesh and Bangladesh Bank ECAI recognition Criteria.

1.1.1 CRISL HISTORY

Credit Rating Information and Services Limited is a company that started its journey
to implement a Concept in Bangladesh – “Credit Rating”. Before CRISL, “credit
Rating” were text paper words for the teachers and students of Bangladesh. The
voyage of how CRISL conceptualized this idea in 1995 and implemented it in
Bangladesh and finally achieved its operating license in 2002 - after almost eight
years of struggle - has a long, interesting, exciting and also painful history. CRISL is
now the national flagship company representing the profession at home and abroad.
For more ---

1994: Conceptualization
The basic root of formation of CRISL may be linked up with the Government’s effort
to organize the first ever Euromoney Conference in Bangladesh in 1994, where a
large number of international investors and good number of world investment forum
members had participated. The participants had concluded as the reason for not
receiving desired investment is that Bangladesh did not have any rating agency, and
neither had the country been rated officially by any international rating agency. In
absence of the above, some of the international rating agencies, based on unfounded
and partial information, rated Bangladesh as “C”, which meant a highly speculative
and risky country for investment. Under the above backdrop, the then Chairman of
the Securities and Exchange Commission- Mr Sultanuzzaman took the initiative to
encourage the private sector to come forward to float a rating agency. As a part of
his initiative he contacted few professionals to explore such as feasibility. Since the
concept of rating and rating agency was absolutely new and finding it as not a
lucrative business proposition and rather a highly research based and very
responsible job, no positive response was received by him. At the last quarter of
1994, the proposal was conveyed to Mr. Muzaffar Ahmed, a Fellow Cost and
Management Accountant through his former colleague Mr Mobassar Husain, a former
Managing Director of MIDAS and Ex Boss. Finding the proposal interesting, Mr
Ahmed took initiative to know about the role of rating agencies and rating. Mr Ahmed
met SEC Chairman Mr Sultanuzzaman several times to know the extent of SEC
support. The SEC chairman introduced Mr Ahmed to some regional rating agencies
and asked him to visit few of them in India. Based on the above Mr Muzaffar Ahmed
visited several rating agencies in India to know the operational aspects of such
companies and its prospects. Internally, Mr Ahmed discussed with few professionals
and business people and made detailed presentations which ultimately convinced
them to join and invest in a rating agency to be formed.

1995 Floatation of company

After having several discussions with SEC and with its encouragement, Mr Muzsffar
Ahmed initiated the floatation of “Credit Rating Information and Services Limited” in
July 1995 with the following professionals:

1 Mr Yusuf Abdullah Harun FCA, former President of Federation of Chamber

of Commerce and Industry, a fellow Chartered Accountant and
industrialist;
2 Mr Mobassar Husain MBA, a former financial and Management consultant
3 Mr Muzaffar Ahmed, A former university teacher and Fellow Cost and
Management accountant
4 Dr Mohamad Abdul Moyeen, a teacher of the Department of Management
Studies, Dhaka University
5 Mr Mohammad Abdul Momen, a teacher of the Institute of Business
Administration, Dhaka University
6 Mr M Mohiuddin,FCMA, a former President of the Institute of Cost and
Management Accountants of Bangladesh;
7 Mr Murshed Salam, a businessman;

Immediately after formation of the company, the Securities and Exchange

Commission was approached for a license to operate the company as a rating
agency. But SEC desired that a broad based regulation need to be promulgated
before it considers licensing CRISL as a rating agency

At a later stage, Mr Yousuf Abdullah Harun and Mr Mushed Salam had decided
not to continue with the company as they observed that the company would need
long time to start operation and may require substantial capital to continue
without license from SEC. With the withdrawal of the above persons CRISL was
put in a distress situation. At this stage Mr. Muzaffar Ahmed started discussion
some senior professionals and finally convinced Mr. Jamal Uddin Ahmed FCA,
former Deputy Prime Minister and former President of ICAB, Mr Motiul Islam,a
Former Secretary Government of Bangladesh, and Mr. A.K Chowdhury, senior
partner of Huda Vasi Chowdhury & Co Chartered Accountants. The above
professionals joined CRISL with nominal amount of share capital. At a later stage
at the initiative of Mr Jamal uddin Ahmad, Mr Rashed Uddin Ahmad FCA, FCMA
was also inducted in the shareholding of CRISL. Mr Jamal Uddin was elected as
the Chairman of the company.

1996: Regulatory framework

On receipt of the application for licensing from CRISL,the SEC had several
discussions with CRISL and took the initiative to have a regulatory framework for
promoting and controlling the operation of rating agencies. The SEC after review
of the operating procedure of the regional rating agencies and inline with them
promulgated the “Credit Rating Companies rules 1996” in 1996, making it
mandatory for the rating agencies to have joint venture with any international
rating agency as a part of licensing requirement. Before the above regulation was
promulgated, CRISL was inaugurated on 18th January 1996 by Mr Saifur Rahman,
the then Minister, Ministry of Finance, Government of the People’s Republic of
Bangladesh in the presence of large number of dignitaries, including
representatives from various embassies, World Bank, USAID etc. But in view of
the new requirement of having Joint Venture in the newly promulgated SEC
Rules, CRISL had to remain dormant and required to identify an international
rating agency as joint venture partner for technology and training.

1997: Joint Venture

As stated earlier, in order to fulfill the requirement of Credit Rating Companies

Rules 1996 for its licensing, CRISL was to hunt for an international Joint Venture
Partner. CRISL contacted Standard and Poors, World’s largest rating agency to
participate in business with CRISL in Bangladesh. But S&P replied that they did
not have any plan to expand in Asia. CRISL also contacted Indian rating
agencies, but SEC replied that they are not international, rather regional. At that
point in time, Mr Faheem Ahmad of Vital Information Services Limited, Pakistan
was in the process of negotiation with Duff and Phelps Credit Rating Agency
(DCR) USA-,to set up the second credit rating agency in Pakistan under the name
and style “DCR-VIS Credit Rating Company Limited”. DCR was the World’s third
largest credit rating company with NSRO status in USA, operating in about 10
countries through joint venture. Mr Faheem has shown his interest to involve
DCR with CRISL through a joint venture where DCR-VIS will also participate.
Based on the above understanding Mr Faheem Ahmed paid a visit to Bangladesh
to finalize initial ideas. In the mean time, CRISL also contacted Rating Agency
Malaysia Berhad, the premier rating agency of Malaysia to join CRISL in equity
participation. The RAM at that point of time was also trying to have a joint
venture with DCR to operate in Hong Kong. RAM was pleased to take an equity
position in CRISL. Based on the above, the DCR agreed to join as the main joint
Venture Partner against 15% equity participation through DCR-VIS at the initial
stage and another 30% at a later stage from other partners . The JV was signed
on 14th March 1997 which consisted of three Agreements- General Agreement
with all CRISL shareholders, Trade Mark and Corporate license Agreement and
Technical Assistance Agreement. The above agreement was submitted to the SEC
Bangladesh as a part of the requirement for getting the credit rating license.

1998: New Direction from SEC to take IFC of World Bank as sponsor

The SEC reviewed application made by the CRISL and advised to convince DCR to
join directly in the equity participation instead of through DCR-VIS as against its
earlier direction to have only jloint venture for technical collaboration. The SEC
further advised CRISL to take IFC of World Bank in the Joint venture before SEC
finally agree to the proposal of licence. CRISL initially decided not to allow IFC in
the shareholding due to its long bureaucratic operating time to decide on any
investment. In addition, CRISL was not interested to take any investment
partner, since CRISL has already hooked DCR and RAM in its joint venture.
However, as desired by SEC, CRISL agreed to consider such proposal.

IFC proposal for New Company

Pursuant to the advice of SEC, CRISL contacted IFC and placed the proposal
before them to join CRISL with maximum 10% equity. The IFC team both from
Bangladesh and also from Washington visited CRISL several times. They also
visited DCR at Chicago to discuss with them about joint venture. After a detailed
study of almost six months, IFC proposed that there should be new rating
company to be promoted by CRISL shareholders excluding ICB, whom they
considered as a conflict of interest. IFC also suggested including FMO of the
Netherlands in sponsorship. IFC further desired that they must see the
investment viability before they finally decide on the venture. The IFC engaged
DCR India Limited, a joint venture of DCR to carry a market survey in Bangladesh
to see the investment viability of floating a rating agency in Bangladesh. The DCR
India took several months, finalized the report and submitted the same to SEC. It
was understood from the SEC that the DCR India concluded that Bangladesh
market was very small and investment in rating agency was not a commercially
viable proposition. Based on the above, CRISL’s application for license was
shelved by SEC without any intimation to CRISL.

The Board of CRISL made several visit to SEC and tried to convince them that
rating may not be a profitable venture, but Bangladesh must have at least one
rating agency for the sake of capital and especially for the development of bond
market. But SEC remained silent on the point of licensing CRISL.

1999 to 2000: Consistent persuasion with SEC and Legal Notice

During the above period CRISL Board made several presentations at SEC, and
tried to convince that the IFC looked at CRISL as an investment proposal and not
as a national need. They had nothing to contribute in the development of CRISL
professionalism. However, SEC remained silent on the issue. Finding no other
alternative, CRISL Board had several meetings and decided that since the SEC
had initially motivated CRISL sponsors to float the rating agency and with its
approval CRISL sponsors had taken capital from aboard, the SEC can not deny its
responsibility of providing a license to CRISL, when CRISL had fulfilled all the
requirements. Therefore, a legal notice may be served on SEC explaining the
above situation. CRISL also decided to give a memorandum of facts from the
very beginning with all correspondences and actions taken before the Board
decides on liquidation of the company. Based on the above decision, the Board
decided that a) a legal notice be served on SEC b) CRISL’s office at BSB Bhaban
be closed and notice be served to BSB for cancellation of Rental agreement and
c) CRISL Bank account be frozen. Based on the above decision a Legal Notice
was served on SEC, office was shifted to a room at the National Scout Bhaban,
which was the Office of the Pride Group of Companies.

2001 to 2002: Period of Hope for License

At the beginning of 2001, after a long silence, SEC Chairman suddenly asked
CRISL to see them to discuss on the issue of license. CRISL team was informed
that SEC was, on principle, agreed to provide license to CRISL. However, CRISL
was asked whether the joint venture partners were still interested to continue
with the joint venture. Based on the above assurance, CRISL contacted Fitch
rating agency which has, by that time, absorbed DCR, as to whether they were
willing to continue with CRISL. Fitch informed CRISL that since the regulators had
taken long time to provide license to CRISL, they were not interested in the joint
 venture agreed by DCR earlier. At this backdrop, SEC asked CRISL to sign a
technical collaboration with RAM to provide technical support to CRISL in addition
to its equity participation. Based on the above advice CRISL CEO visited Malaysia
to sign a Agreement for Technical support from RAM. Finally CRISL signed the
above agreement with RAM for technical support and training of CRISL
professionals against a Fee for several years. On finalization of the above and ist
submission to SEC, CRISL was awarded license by SEC - and a long journey from
1996 to April 2002 was over.

1.1.2 CRISL AFFILIATION

With SEC
CRISL has been licensed by the Securities and Exchange Commission (SEC)
under Credit Rating Companies Rules 1996 under section ------ as the rating
agency of the country. It has fulfilled all the regulatory requirements of SEC and
is fully guided as the provisions of above SEC Rules.

With Bangladesh Bank

CRISL has been rating the banks as the premier rating company of the country as
required by the banks under BRPD Circular No----- dated -----. In addition,
CRISL is being recognized by the Bangladesh Bank as the External Credit
Assessment Institution (ECAI) to carry out the banking counter party ratings as
required by the banks in order to comply with the BASEL-II guidelines.

Founder Member of ACRAA

CRISL is a founder member and as such a signatory to the Memorandum of the
Association of the Credit Rating Agencies in Asia (ACRAA) sponsored by the Asian
Development Bank. ACRAA, the apex body of the rating agencies in Asia is
located in Manila, Philippines which organizes training and best practice
workshops for the professionals of member rating agencies.

Registrar of Joint Stock Companies and Firms

CRISL is a public limited company registered with the Registrar of Joint Stock
Companies and Firms of the Government of the Peoples Republic of Bangladesh.
Therefore, CRISL has been operating with its compliance with Memorandum of
Articles of Association, Articles of Association in addition to the provisions of the
Companies Act 1994

1.1.3 CRISL SHAREHOLDERS

CRISL is a closely held public limited company owned by 12 institutional and

shareholders of three countries namely Bangladesh, Pakistan and Malaysia. The
shareholders are:

Institutional shareholders
1 Rating Agency Malaysia Berhad
2 JCR-VIS Credit Rating Company of Pakistan
3 Investment Corporation of Bangladesh
4 ABN Amro of Pakistan

Professional Shareholders
 5 Mr Jamal Uddin Ahmad FCA
6 Mr Muzaffar Ahmed FCMA FCS
7 Professor Dr Muhammad Abdul Moyeen
8 Professor Mohammad Abdul Momen
9 Mr.Abul Khair Chowdhury FCA, FCS
10 Mr M. Mohiuddin FCMA
11 Mr Rashed Uddin Ahmad FCA FCMA
12 Mr Mofizul Islam Khan. M com

1.1.4 CRISL BOARD OF DIRECTORS

CRISL Board of Directors consists of four institutional shareholders, four Professional
shareholders and the President and CEO of the company. The composition of the Board is as
follows:
Institutional shareholders

1 Mr Jamal Uddin Ahmad FCA, Former Deputy Prime Chairman

Minister, Government of Bangladesh
2 Mr. Suresh Menon Executive Director of RAM, Member
3 Mr. Faheem Ahmad , President and CEO, Member
JCR-VIS Credit Rating Co Ltd, Pakistan
4 Mr. Md. Ziaul Hoque Khondker, Managing Director ICB, Member
5 Mr. Navid A Khan, Managing Director ABN Amro Member
Pakistan,

6 Dr. Muhammad Abdul Moyeen, Professor, Departmnet of Member

Business studies University of Dhaka
7 Mr. A.K Chowdhury, FCA Former President, ICAB Member
8 Mr. M Mohiuddin FCMA, Former President, ICMAB Member

9 Mr. Muzaffar Ahmed FCMA FCS President and CEO CRISL Member

1.1.5 CRISL ORGANOGRAM

CRISL has been operating under a structure which appears as follows:

BOARD

CEO

Secretary

Finance & Research, Product Management

Administration Business Promotion Development, Training Business Operations Information Compliance
& Publication System

Admin & Personnel New Business

Banks / Financial
Corporate
Institutions
Finance & Accounts
Surveillance Structured Product
Insurance

Others
1.1.5 CRISL FINANCIALS

CRISL started its journey with a paid up capital of Taka 5 Million in 1995. In order
to develop its human resources, logistics, hard and soft infrastructure it was
required to increase the paid up capital to 20 million. While signing joint venture,
the Duff and Phelps Credit Rating Company (DCR), the joint venture partner of
CRISL estimated that in order to float a rating company, it would be the amount
required to develop human resources, soft and hard infrastructure of a company
and to come at a stage where a rating company can function independently. The
above paid up capital was utilized to pay for the technology, human resource
development through training, in developing CRISL infrastructure, and also in the
acquisition of logics such as computers, books, software, office space, transport
etc. CRISL started earning profit with effect from the year 2006, recovered its
earlier losses, and fully paid the amount payable to the technical partners for
human resource development and rating technology. The present internal capital
generation will assist CRISL to remain independent of the rating fee, issuers, and
it will place CRISL to stand on its own, and keep its quality services in line with
international standard.

1.1.6 CRISL LOGISTICS

CRISL is now equipped with appropriately trained human resources. It has
acquired about 6,000 sft office space at Segun Bagicha, Dhaka and
accommodated its office with all support services. Having a highly equipped
computer network, all staff is linked with server with appropriate disaster system
management. CRISL has set up a highly skilled database on the national
economy, sector by sector. CRISL’s office is well protected with entry barriers so
that the confidentiality is fully protected. For smooth operation, the company has
created transport to contact and visit client office.