How to Bring Pakistani Credit Rating Agencies at Part with Foreign Credit Agencies

Imran Ali

MPRA Paper from University Library of Munich, Germany

Abstract: Credit rating is a measure of an issuer to meet its commitment to pay all promised interest and principal amounts in full and on time. Borrowers are rated by credit rating agencies according to the borrower's credit-worthiness or risk profile. Credit ratings are expressed as letter grades such as A-, B, or C+. These ratings are based on various factors such as a borrower's payment history, foreclosures, bankruptcies and charge-offs. There is no exact science to rating a borrower's credit, and different lenders may assign different grades to the same borrower. In Pakistan two local credit rating companies are operating. One is JCR-VIS (JCR-VIS is a joint venture between Japan Credit Rating Agency, Ltd. (JCR) - Japan's premier rating agency, and Vital Information Services (Pvt.) Limited (VIS) – Pakistan’s only data bank and financial research organization. And the other rating agency is PACRA “Pakistan Credit Rating Agencies Limited” these both rating agencies are approved by SECP and have licenses for their operations. In my project I have done research on credit rating companies working and the rules and regulations they are fallowing in their working. I have analyzed that these both companies are fallowing the international rules and procedures. And have the membership in ACRRA. ACRAA (the Association of Credit Rating Agencies in Asia) is an association formed by Asian credit rating agencies, and assisted by the Asian Development Bank. ACRAA has been set up to act as a forum for exchange of skills and ideas among rating agencies, and for the promotion of Best Practices and norms of conduct, thereby to aid in the development of Asia's financial markets. I have also met with some professional to get their views about the local credit rating agencies and I have analyzed some people are satisfy and some are not with their procedures. I have given some recommendation to improve the working of credit rating agencies on the basis of my analysis in chapter 5.

Keywords: Credit Rating; Credit Rating Agencies (search for similar items in EconPapers)
JEL-codes: G2 G29 (search for similar items in EconPapers)
Date: 2005-10-18, Revised 2021-12-17
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