State Bank of Pakistan Renews Recognition of Credit Rating Agencies VIS and PACRA

State Bank of Pakistan Renews Recognition of Credit Rating Agencies VIS and PACRA

Karachi, June 6, 2023: The State Bank of Pakistan (SBP) has officially renewed the eligibility and recognition of two credit rating agencies, VIS Credit Rating Company Limited (VIS) and The Pakistan Credit Rating Agency Limited (PACRA), as External Credit Assessment Institutions (ECAIs) until December 31, 2023.

Under this renewal, banks and Development Finance Institutions (DFIs) utilizing the standardized approach of the Basel framework are permitted to utilize the credit ratings provided by VIS and PACRA for the calculation of Capital Adequacy Ratio (CAR).

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This decision by the SBP ensures that the credit ratings assigned by VIS and PACRA will continue to be considered reliable and valid for assessing the creditworthiness of entities operating in Pakistan’s financial sector. The recognition of these credit rating agencies as ECAIs highlights their competence and credibility in providing accurate and independent assessments of credit risk.

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By extending the recognition of VIS and PACRA, the SBP reaffirms its commitment to promoting a robust and transparent credit assessment framework, facilitating effective risk management practices within the banking and financial sectors.

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In conclusion, the SBP’s decision to renew the status of VIS and PACRA as recognized ECAIs emphasizes their significance in enabling banks and DFIs to utilize credit ratings for calculating the Capital Adequacy Ratio, thereby promoting stability and efficiency in Pakistan’s financial markets.

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