Number and Short Name of Grades used in the CRG:
|
Grading |
Short Name |
Number |
|
Superior |
SUP |
1 |
|
Good |
GD |
2 |
|
Acceptable |
ACCPT |
3 |
|
3 Marginal/Watch list |
MG/WL |
4 |
|
Special Mention |
SM |
5 |
|
Sub standard |
SS |
6 |
|
Doubtful |
DF |
7 |
|
Bad & Loss |
BL |
8 |
Superior:
- Credit facilities, which are fully
secured i.e. fully cash covered.
- Credit facilities fully covered
by government guarantee.
- Credit facilities fully covered
by the guarantee of a top tier international Bank.
Good:
- Strong repayment capacity of the
borrower
- The borrower has excellent liquidity
and low leverage.
- The company demonstrates consistently
strong earnings and cash flow.
- Borrower has well established, strong
market share.
- Very good management skill &
expertise.
- All security documentation should
be in place.
- Credit facilities fully covered
by the guarantee of a top tier local Bank.
- Aggregate Score of 85 or greater
based on the Risk Grade Score Sheet
Acceptable:
- These borrowers are not as strong
as GOOD Grade borrowers, but still demonstrate consistent earnings.
- Borrowers have adequate liquidity,
cash flow and earnings.
- Credit in this grade
would normally be secured by acceptable collateral (1st charge over inventory /
receivables / equipment / property).
- Acceptable management
- Acceptable parent/sister company
guarantee
- Aggregate Score of 75-84 based on
the Risk Grade Score Sheet
Marginal/Watch list:
- This grade warrants greater attention
due to conditions affecting the borrower, the industry or the economic environment.
- These borrowers have an above average
risk due to strained liquidity, higher than normal leverage, thin cash flow and/or
inconsistent earnings.
- Weaker business credit & early
warning signals of emerging business credit detected.
- The borrower incurs a loss
- Loan repayments routinely fall past
due
- Account conduct is poor, or other
untoward factors are present.
- Credit requires attention
- Aggregate Score of 65-74 based on
the Risk Grade Score Sheet
Special Mention:
- This grade has potential weaknesses
that deserve management‘s close attention. If left uncorrected, these weaknesses
may result in a deterioration of the repayment prospects of the borrower.
- Severe management problems exist.
- Facilities should be downgraded
to this grade if sustained deterioration in financial condition is noted (consecutive
losses, negative net worth, excessive leverage),
- An Aggregate Score of 55-64 based
on the Risk Grade Score Sheet.
Substandard:
- Financial condition is weak and
capacity or inclination to repay is in doubt.
- These weaknesses jeopardize the
full settlement of loans.
- Bangladesh Bank criteria for sub-standard
credit shall apply.
- An Aggregate Score of 45-54 based
on the Risk Grade Score Sheet. Doubtful:
- Full repayment of principal and interest is unlikely and the possibility of
loss is extremely high.
- However, due to specifically identifiable
pending factors, such as litigation, liquidation procedures or capital injection,
the asset is not yet classified as Bad & Loss.
- Bangladesh Bank criteria for doubtful credit shall apply.