Argus Credit Rating Services Ltd: A comprehensive study on the effects of the current situation of credit rating industry on ACRSL

Abstract

Argus Credit Rating and Services Limited is the fifth credit rating agency to enter the credit rating industry of Bangladesh. Argus is a joint-venture with Singapore based credit rating agency DP Information Group which has contributed in the development of credit rating sector in countries like Indonesia, China and Philippines. In this paper, I have presented an overview on ACRSL where I have described their history, mission, vision, the types of credit ratings done by ACRSL and their overall rating procedure. The main focus of this report is the industry analysis through which I have examined the external and internal factors that affect the business of ACRSL. I have also identified the challenges of the credit rating industry and the strategies adopted by Argus to fight back those challenges. From the industry analysis, I have found out that the credit rating industry now resides between the maturity and decline stage. The strong rivalry among the existing credit rating agencies and the threat of “IRBA” in near future is pushing the credit rating industry to the decline stage. But the increase of “SME rating” and increase of “Instrument rating” can open new opportunities for credit rating agencies like ACRSL. Another biggest challenge for the credit rating agencies in Bangladesh is the lack of monitoring in the financial sector by the regulators. Due to lack of monitoring by the regulators, some credit rating agencies break the “ethical code of conduct” and neglect the guideline and rules by the regulatory bodies. Also due to the lack of governance some banks uses “expired credit rating” which affects the business of credit rating agencies. To handle this issue, Bangladesh Bank has proposed to “shut down” the credit rating agencies that doesn’t abide by the guidelines of BB and BSEC and has also issued new guidelines to solve the issues of the Banking sector.