Dhaka, Oct. 3 -- Asset-quality reviews conducted by foreign firms this year have uncovered hidden bad debts and under-reported non-performing loans (NPLs) in domestic banks and other financial institutions, exposing the futility of the local credit rating industry.

Experts say the industry is overcrowded, creating fierce competition among agencies that allows clients to secure higher ratings at lower costs. As a result, credit ratings-the core product they sell-lose credibility, undermining the very risk assessments on which investors rely before deciding where to invest.

Bangladesh has four times as many rating agencies as India and 2.6 times as many as China, despite its economy being only 8.7 per cent the size of India's and just 2.4...