Limitations of ICRRS

This research paper examines the limitations of the Internal Credit Risk Rating System (ICRRS) as found through various mathematical models. The ICRRS is used to evaluate the creditworthiness of borrowers through a structured framework, given by Bangladesh Bank that incorporates both quantitative and qualitative factors. This research provides an overview of the ICRRS methodology, its application across different industry sectors, and discusses its effectiveness and potential limitations based on individual factor analysis, observations and mathematical reasoning.


Purpose of Research: The purpose of this research paper is to justify that;
ICRRS has some limitations.
Unacceptable rating can affect the aggregate ICRRS score.
Unacceptable ratings can lead to degradation of financial performance.
Provide a criteria for maximum limit of unacceptable rating that can be accepted.