BOARD LEVEL – CREDIT & RISK COMMITTEE (BCRC)
The proposed roles and responsibilities of the Board Level Credit & Risk Committee is summarized below:
The Board Credit/Risk Committee shall be formulated to ensure a continuous Board level formal oversight of the risks embedded in the Bank’s operations .It shall assist the Board of Directors in determining the strategic direction of the Bank by providing them inputs on credit & risk management.
ROLES AND RESPONSIBILITIES
Policy Review / Approval
- Setting the Bank’s broad credit parameters/limits and establishing overall Credit/lending strategy and principles.
- Oversee the establishment, implementation, review and monitoring of Credit Policies, Procedures, rating methodology, credit risk appetite , portfolio strategy and new credit products.
- Review and approve management’s recommended lending objectives, policies and guidelines that direct the loan portfolio.
- Reviewing the proposed modifications to the credit management policies.
- Reviewing and approving individual credit and investment decisions, that falls under the Board Credit Committee’s purview and pose material risk to the Bank’s business strategy or reputation.
- On an annual basis define and delegate sufficient credit / lending and investment authorities of the Bank at various levels of Management (through Credit Committee) to enable implementation of the Credit and Investment Strategy / Policy.
- Seek ratification of approvals provided by them at the quarterly Board Meeting.
- Review and approve credit risk policy exceptions.
Oversight / Compliance:
- Review and ensure compliance with the relevant prudential guidelines as laid down by the regular with respect to credit collateral and exposure norms.
- Ensuring that the resources allocated for credit management are adequate given the size, nature and volume of the business.
- The Committee shall also review the broad credit portfolio ,risk reports , group exposures, NPL status and other credit risk related issues within the Bank.
- Review issues raised by Internal Audit on the credit portfolio.
As there is one single Board committee to manage Credit/Risk functions hence the Board Credit/Risk Management Committee shall also ensure a continuous Board level oversight of the risks embedded in the Bank’s operations. It shall assist the Board of Directors in determining the strategic direction of the Bank by ensuring that there is an effective risk management framework in place to measure and mange risks across the bank.
Additional risk management activities would include the following:
- Based on the proposals of the CFO and HOC, make recommendations to the Board regarding Capital Management (including Economic Capital, Risk Capital, Regulatory Capital, necessary buffer, growth capital needs etc.).
- Review, at least once a year, the Risk Policies and Risk Appetite to satisfy itself that they remain appropriate and prudent and make resulting recommendations to the Board.
- Monitor periodically the Bank’s exposure to all types of risks notably market, credit , operational , liquidity and regulatory risk.
- Reviewing various Risk Management information System Reports. The Committee shall also consider the comments of the relevant senior management official /committee while reviewing such exception/MIS reports.
- Identifying the key risk exposures to the Bank and communicating the planned/executed corrective actions to the Board of Directors.
- Formulating an overall view of the adequacy of the Bank’s capital and its optimum allocation to various business activities with a risk weighted perspective.
- Ensuring robustness of financial models and the effectiveness of all systems, if any, used to quantify risks and.
- Ensuring that the Bank has a robust management information system to ensure effective and timely reporting of risks.