refer to section 2.3 of instructions on Minimum Capital
Requirements (MCR) issued vide BSD circular 8 dated
June 27, 2006.
In this regard it is clarified that for capital adequacy
purposes the term Solicited Rating shall mean a rating
initiated at the request of entity being rated under
a formal agreement between the rating agency and the
entity being rated. To be eligible for risk weighting
purposes, the rating must meet following requirements;
agency is given access to all information required
to rate the entity;
ii. agency is authorized to assign rating;
iii. and rating assigned is disclosed publically
The requirement of formal agreement between rating agency
and the entity being rated, as mentioned in point (2)
above, would not be applicable in case the rating is
conducted by international rating agencies recognized
by SBP, however rating should be publically disclosed.
With immediate effect, Banks/ DFIs would be allowed
to use only solicited ratings assigned by recognized
External Credit Assessment Institutions (ECAIs) for
the purpose of capital adequacy provided the ratings
fulfill following conditions;
All ratings used should be publically disclosed by
the ECAIs along with its history.
b. The rating agency should have reviewed/ assigned
the rating within previous 15 months.
c. Banks/DFIs should have mechanism to monitor changes
in ratings (upgrade, downgrade and withdrawals) for
accurate Capital Adequacy Ratio reporting.
other instructions on the subject shall however, remain
Please acknowledge receipt.