The Pakistan Credit Rating Agency Limited

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Best Practices

Best practices - regulatory and voluntary disclosure - underlies PACRA’s quest to be transparent and fully compliant with regulation. Regulatory disclosures take the shape of periodic filings with the respective regulator (mainly Securities & Exchange Commission of Pakistan and State Bank of Pakistan) and multiple information on our website; particularly that available in this section. Examples of voluntary disclosure are the availability of complete ratings histories on PACRA’s website and summary rating reports supplementing the requisite ratings press release. Disclosures, though varied and highly distinct from each other, serve to convey to the users of ratings PACRA’s practices as it conducts its business.

Codes of Conduct

PACRA has established codes of conduct for various functional levels – PACRA code of conduct, employee code of conduct, Rating Committee (RC) code of conduct, and the Board code of conduct. The codes (as they are collectively termed) constitute the mode and practices that should drive the conduct and functionality at each level. Adherence to the codes is mandatory and is monitored through a formal compliance function.

PACRA Code of Conduct RC Code of Conduct

PACRA code of conduct, laying out the broad framework lending direction to other codes of conduct, comprises requisites for PACRA as a rating agency. It is referenced based upon multiple regulatory frameworks - IOSCO’s (the International Organization of Securities Commissions) code of conduct, ACRAA code of conduct, the Securities and Exchange Commission’s (SECP) and State Bank of Pakistan’s (SBP) regulations.
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At PACRA, the rating opinion is developed not by any single individual but by the accumulated knowledge and deliberation of RC comprising qualified professionals. RC Code of Conduct details the structure of the RC at PACRA and describes how the RC should conduct itself to ensure the evolution of a high quality opinion.
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Employee Code of Conduct Board of Directors (BoD) Code of Conduct

The Employee code of conduct establishes the boundaries and limitations reigning in the day to day conduct of each and every employee. The code primarily pertains to what an employee is or isn’t allowed to do in any matter with potential; repercussions for PACRA’s integrity and brand image.
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BoD code of conduct lays down guidelines to ensure high standards of honesty and integrity on the part of directors. This is critical as the board is responsible for setting up, upholding and ensuring compliance regarding the standards of conduct in accordance with regulatory requirements and best practices.


PACRA is regulated by the apex regulators of Pakistan, the Securities and Exchange Commission of Pakistan (SECP) and the State Bank of Pakistan (SBP). PACRA is the founding member of the Association of Credit Rating Agencies in Asia (ACCRA) and is compliant with ACRAA essential and recommended practices. Moreover, PACRA claims compliance with the IOSCO code of conduct for credit rating agencies.

Registration as a Rating Agency Recognition as an External Credit Assessment Institution

PACRA is registered with SECP as a credit rating company. This registration is renewed annually subject to the fulfillment of SECP Code of Conduct for credit rating companies’ requirements.

Rating agencies whose ratings are deemed appropriate for the purpose of capital savings under BASEL II are termed ECAIs. PACRA’s recognition from SBP as an ECAI endorses PACRA’s eligibility to assign and issue ratings for such purposes. The ECAI status is renewed annually and includes, amongst other things, a comprehensive visit to PACRA’s offices by SBP personnel.

ACRAA Code of Conduct for credit rating agencies IOSCO Code of Conduct for credit rating agencies

ACRAA is a forum organized and maintained by Asian regional credit rating agencies for harmonizing industry best practices. PACRA is required to comply with the guidelines laid out in ACRAA’s Code of Conduct Fundamentals for Domestic Credit Rating Agencies.

IOSCO, a global cooperative of securities regulatory agencies that aims to establish and maintain worldwide standards for efficient, orderly and fair financial markets, has a set of guidelines for credit rating agencies. PACRA is required to comply with the IOSCO Code of Conduct Fundamentals for Credit Rating Agencies.

Rating Performance

PACRA monitors the performance of its ratings and publishes its default and transition statistics on an annual basis. PACRA also publishes a special paper titled Transition to Default pertaining to each individual defaulted issuer / entity. PACRA has a detailed transition methodology available on its website.

Transition Studies Transition to Default Series

PACRA Transition Studies present PACRA’s ratings performance over a 5-10 years period. The study comments upon the historical performance of PACRA’s ratings in detail, also presenting an outlook on medium-term credit trends.

PACRA Transition to Default Series are a concise special comment publication outlining the rating history and events leading upto default. It also provides a complete rating history (initial-to-default) of the defaulted entity / issuer. The publication is disseminated within two months of the assignment of a Default “D” rating by PACRA.

Transition Methodology

PACRA has a comprehensive transition methodology describing the tools and analysis employed in preparing PACRA transition study.


PACRA carries the onus of leadership. As such, from time to time, it conducts research into issues having both a direct and indirect bearing upon credit risk and its dynamics. One key area of such research is best practices. Publications pertaining to best practices may be accessed through this section