BOARD INTEGRATED RISK MANAGEMENT COMMITTEE REPORT

COMPOSITION OF THE INTEGRATED RISK MANAGEMENT COMMITTEE

The Board appointed Integrated Risk Management Committee comprised of 4 Board members including the Chairman of the Committee who is a Non-Independent Director as set out below. The Chief Executive Officer, Vice President – Group Risk and the Compliance Officer are also members of this Committee.

COMPOSITION AS AT 31ST DECEMBER 2017

C – Chairman, M – Member

CHARTER OF THE COMMITTEE

The Integrated Risk Management Committee was formed in June 2008 replacing the Risk & Credit Committee of the Board, in compliance with the Section 3 (6) of Direction No. 11 of 2007, on the subject “Corporate Governance for Licensed Commercial Banks in Sri Lanka”, issued by the Monetary Board of the Central Bank of Sri Lanka under the powers vested in the Monetary Board, in terms of the Banking Act No 30 of 1988. The composition and the scope of work of the Committee are in conformity with the provisions of the said Direction.

The Charter of the IRMC was approved by the Board of Directors and is reviewed annually. As part of the annual review process, Committee reviewed the charter in February 2017. The charter was reviewed again in November 2017 in order to incorporate some of the functions pertaining to Compliance and Legal Affairs with the dissolution of the Corporate Governance and Legal Affairs Committee. As per the Charter, the scope of work includes the following;

• Work closely with key management personnel and make decisions on behalf of the Board within the framework of the authority and responsibility assigned to the Committee

• Assess all risks of the Bank and Group on a monthly basis through appropriate risk indicators and management information. • Submit a risk assessment report within a week of each meeting to the Board seeking the Board’s views, concurrence and/or specific directions.

• Review the adequacy and effectiveness of all management level committees such as the Credit Committees, Credit and Market Risk Policy Committee, Operational Risk Policy Committee and the Asset-Liability Committee to address specific risks and to manage those risks within quantitative and qualitative risk limits as specified by the Committee/ Board

• Take prompt corrective action to mitigate the effects of specific risks in the case such risks are at levels beyond the prudent levels decided by the Committee/ Board on the basis of the bank’s policies and regulatory and supervisory requirements.

• Take appropriate action against the officers who fail to identify specific risks, and/ or take prompt corrective actions as recommended by the Committee, and / or as directed by the Director of Bank Supervision. The course of action to be taken against staff would be governed by the HR disciplinary action procedure in force.

• Review and discuss the scope of work of the Group Risk Management Department.

• Receive copies of regulatory examination reports pertaining to matters that are within the purview of the Committee and Management’s responses thereto.

COMMITTEE GUIDING PRINCIPLES

• Responsible to the Board of Directors and the Committee’s role is one of oversight

• Management is responsible for designing, implementing and monitoring an effective risk program.

• Line business managers are responsible for managing risks in the areas for which they are responsible.

• Each member of the Committee shall be entitled to rely in good faith on the integrity of those persons from whom he or she receives information.

COMMITTEE MEETINGS

The Committee held five meetings, during the year under review to discuss the normal scope of work and one additional meeting to discuss the ICAAP Framework of the Bank. Attendance of Committee Meetings is given on page 216 The proceedings of the Committee meeting have been reported to the Board of Directors. Key members of the staff participate at the meetings as appropriate.

METHODOLOGY USED BY THE COMMITTEE

• Assess all risks faced by the Bank, its subsidiaries and associate companies, through appropriate risk indicators, dash boards and management information.

• Specify Risk Appetite and recommend prompt corrective action to mitigate the effects of specific risks in case such risks are at levels beyond the prudent levels decided by the Committee on the basis of Bank’s/ Group’s policies and regulatory and supervisory requirements.

SUMMARY OF ACTIVITIES IN 2017

Credit Risk

• Reviewed and approved policies and operating guidelines related to Risk Management Policy on Bank’s Exposure to Stock Market Activities, Policy on Cross Border Exposure, Impairment Policy and Loan Review Policy

• Reviewed portfolio quality covering

  • The amount, characteristics, concentrations and quality of the Bank’s loan portfolio, large credit exposures, sector and geographical distribution of portfolio, NPL analysis based on business lines, product category, sector wise

  • Exposure to Stock Market Activities / Margin Trading Exposure Reports

  • Collections and Recoveries

  • Portfolio Value at Risk

  • Country Risk Exposures

• Reviewed work carried out by the Credit Committees, Credit and Market Risk Policy Committee by reviewing the decisions taken by each committee

Operational Risk

• Reviewed and approved policies related to Operational Risk, namely Operational Risk Policy, Operational Risk Data Collection paper, Risk and Control Self-Assessment paper, Key Risk Indicators Methodology paper and Business Continuity Framework.

• Reviewed operational risk issues, including but not limited to:

  • Significant Operational Risks and Losses.

  • Key Risk Indicators related to HR, Information Technology, Account Reconciliations, Audit points and Compliance related incidents.

  • The adequacy of the Bank’s Business Continuity and Disaster Recovery planning including the review of results of Business Continuity Plan (BCP) / Disaster Recovery (DR) drills.

• Reviewed work carried out by the Operational Risk Policy Committee including the decisions taken by the Committee

Liquidity and Market Risk

• Reviewed and approved the Bank’s policy framework, procedure guidelines, terms of references (TOR’s) for the management of Market and Liquidity Risk, to ensure the same is designed to facilitate the identification and assessment of the above risks and adequacy of controls.

• Reviewed and approved the Market and Liquidity Risk limit framework based on the Bank’s risk appetite to optimize business potential

• Reviewed exposures/information and monitor the effectiveness of the management of Market and Asset Liability Risk Management, including

  • Strategies and other relevant issues related to financial market activities and business environment.

  • Financial position, forecasts and business performance.

  • Market risk analysis & stress testing.

  • Analysis of Asset Liability Committee (ALCO) reports and decisions taken by each committee and assess effectiveness of the committees in line with TOR.

  • Liquidity risk analysis & stress testing

  • Treasury Dealing Room positions, limits, exposures and limit compliance

  • Counterparty exposures.

Compliance

• Monitors and assesses the Bank’s compliance with laws, regulations and regulatory obligations based on the Quarterly Compliance Report submitted to the Committee

• Ensures that the compliance framework, policies and processes are designed to manage, monitor and report compliance and to minimize potential for breaches, fines or penalties and to ensure that appropriate remedial action is taken to address instances of non-compliance.

• Keeps abreast of any emerging regulatory developments

• Reviewed and approved the Anti-Money Laundering and Suppression of Terrorist Financing framework, procedures, guidelines to ensure that is Risk Based and the same is designed to facilitate the identification and assessment of the above risks and adequacy of controls in this area.

• Reviewed and approved the Annual Compliance Program work carried out.

• Track progress of action to be taken for supervisory concerns identified by CBSL and ensure timely completion of same.

• Ensure effective implementation of governance related policies at the Bank which included the Compliance Policy and Code of Conduct, the Securities Trading Policy and the Anti-Bribery and Corruption Policy and Related Party Transaction monitoring.

Others

• The Committee reviewed the Key Risk Indicators of the Group Companies on a monthly basis through the monthly KRI statements and quarterly Risk Assessment Report. Group Companies covered are NDB Investment Bank, NDB Capital Holdings, NDB Wealth Management, NDB Securities, NDB Capital Bangladesh, NDB Zephyr and Development Holdings

• Reviewed and approved Annual Review of Internal Capital Adequacy Assessment Process (ICAAP) Document for 2017

• Reviewed performance against Risk Appetite

• Reviewed/approved the Integrated Risk Management Framework, Stress Testing Policy and Framework, Model Validation Policy, Valuation Policy and Title Policy of the Bank

Appreciation

The Committee wishes to convey its sincere gratitude to its former members, Ms. Anula Harasgama and Mr. Nihal Welikala for their valuable contribution to the Committee during the year.

D S P Wikramanayake
Chairman
Integrated Risk Management Committee

20 February 2018
Colombo

BOARD AUDIT COMMITTEE REPORT

COMPOSITION

The board appointed Audit Committee comprised of 5 Board members. During the year 2017 the Committee comprised of the following;

• The Chairman of the Committee, Mr. T L F Jayasekara who is an Independent Non- Executive Director, is a Fellow Member of the Institute of Chartered Accountants of Sri Lanka and counts many years of experience in the Financial Services industry. The Vice President Group Audit functions as the Secretary to the Committee.

  CHARTER OF THE COMMITTEE

  The Charter of the Committee approved by the Board, clearly defines the Terms of Reference of the Committee and is periodically reviewed and revised with the concurrence of the Board of Directors. This process ensures that new developments relating to the Committee’s functions and concerns are adequately addressed. The Audit Committee Charter was last reviewed and approved by the Board of Directors in the third quarter of 2016.

  The Audit Committee is responsible to the Board of Directors and reports on its activities regularly. The functions of the Audit Committee are geared to assist the Board of Directors in its general oversight on financial reporting, internal controls and functions relating to internal and external audit.

  GUIDING PRINCIPLES

  The Committee functions are structured and regulated in accordance with the guidelines issued in the Banking Act Direction No.11 of 2007 on ‘Corporate Governance for Licensed Commercial Banks in Sri Lanka’ and its subsequent amendments (hereinafter referred to as the “Direction”), ‘Rules on

  Corporate Governance under Listing Rules of the Colombo Stock Exchange’ and ‘Code of Best Practice on Corporate Governance’ issued jointly by The Institute of Chartered Accountants of Sri Lanka (CASL) and the Securities and Exchange Commission of Sri Lanka (SEC).

  COMMITTEE MEETINGS

  The Committee held seven meetings during the year to discuss the matters coming under their preview. Attendance of the Committee members are given on page 216. The formalized Minutes of the Committee meetings with details of matters discussed are regularly tabled at Board meetings.

  Vice President Group Audit, Chief Executive Officer and the Bank’s External Auditors attended all meetings. The Committee also invited members of the Senior Management of the Bank to participate in the meetings from time to time on a need basis.

  The Chairman of the Bank as an optional invitee also attended two meetings during the year. The Audit Committee met the External Auditors twice during the year, without the presence of CEO and the Corporate Management, to ensure that the Auditors had the independence to discuss any concerns and express their opinions on any matter and also for the Committee to have the assurance that the management has fully provided all information a

  METHODOLOGY USED BY THE COMMITTEE

  • Review the Interim Financial statements and the Bank’s annual Financial Statements in order to monitor the integrity of such statements prepared for disclosure, prior to submission to the Board of Directors.

  • Examine any matter relating to the financial and other connected affairs of the Bank.

  • Ensure that efficient and sound financial reporting systems are in place and are well managed in order to provide accurate, appropriate and timely information to the Board of Directors, Regulatory Authorities, the Management and Other Stakeholders.

  • Ensure the Bank has adopted and adhere to policies which firmly commits the Bank to achieve the highest standards of good corporate governance practice.

  • Review the quality and the appropriateness of Accounting policies and their adherence to statutory and regulatory compliance requirements and applicable Accounting Standards.

  • Review the outcome of the annual Risk Assessment Process and Internal audit plan assessing independence and performance of the Internal Audit function.

  • Review internal audit reports and liaising with Management in taking precautionary measures to minimize control weaknesses, procedure violations, frauds and errors.

  • Review External Audit Management Letter and Statutory inspection reports in relation to matters under Board Audit Committee (BAC) purview and follow up on their findings and recommendations.

  SUMMARY OF ACTIVITIES IN 2017

  Reporting of Financial Position and Performance

  The Committee assists the Board to discharge their responsibility in the preparation of Financial Statements that evidence a true and fair view on the financial position and performance in accordance with the Bank’s accounting records and as per the stipulated requirements of the Sri Lanka Accounting Standards. The Committee reviews;

  • The adequacy and effectiveness of the Internal Controls, Systems and Procedures over Financial Reporting.

  • The effectiveness of the Financial Reporting Systems in place to ensure reliability of the information provided to the stakeholders.

  • The Bank’s Financial Statements, Accounting Policies and practices and reasonableness of the underlying assumptions for estimates and judgments made in preparing the Financial Statements.

  • The processes by which compliance with Sri Lanka Accounting Standards (SLFRS/ LKAS) and other regulatory provisions relating to financial reporting and disclosures are ensured.

  • The Annual Report and Accounts, and the Interim Financial Statements prepared for publication together with the press releases prior to submission to the Board.

  Compliance with the Revised Sri Lanka Accounting Standards

  The adoption of the revised Sri Lanka Accounting Standards (SLFRS/LKAS) and the impact of the same on the Bank’s Financial Statements have been independently validated by the External Auditors during their year-end audit and the process was continuously reviewed by the Committee.

  The Committee also has taken into consideration the requirements of the Accounting Standard- SLFRS 9 on “Financial Instruments” that has been issued with the effective date of January 01 2018, approved the Product Policy Paper on Classification of Financial Instruments.

  Mechanism of Internal Controls

  During the year, the Committee reviewed the effectiveness of the Bank’s Internal Control System and the CEO’s quarterly confirmation on the internal control environment. Additionally, the Committee assessed the effectiveness of the Bank’s internal controls over financial reporting as of 31st December 2017, as required by the Banking Act Direction No.11 of 2007, Corporate Governance for Licensed Commercial Banks in Sri Lanka, Subsection 3(8) (ii) (b), based on the “Guidance for Directors of Banks on the Directors’ Statement on Internal Control” issued by The Institute of Chartered Accountants of Sri Lanka. The result of the assessment is given on pages 283 and 284 in the “Directors’ Statement on Internal Control” in the Annual Report. The External Auditors have also issued an Assurance Report on the Directors’ Statement on Internal Controls. The report is given on page 286 of the Annual Report.

  The Committee also regularly reviews the Internal Control Procedures in place to ensure that necessary control and mitigating measures are available in respect of newly identified risks.

  Group Audit

  The Committee ensures that the Internal Audit Function is independent of the activities it audit and that the audits are performed with impartiality, proficiency and due professional care.

  The Vice President Group Audit reports directly to the Board Audit Committee. The Bank has adopted a risk- based audit methodology and audit approach. The Audit universe consists of all Auditable Areas/ processes of the banking group, which are audited annually based on a risk based audit plan approved by the BAC.

  The Bank has adopted a risk- based audit methodology and audit approach. The Audit universe consists of all Auditable Areas/ processes of the banking group, which are audited annually based on a risk based audit plan approved by the BAC.

  A risk grading matrix has been adopted for assessing and measuring the risks identified during audit assignments carried out by the Group Audit.

  The Audit Committee reviewed the findings along with the management action plans of the audits completed and their evaluation of the Bank’s internal control systems. The Committee also reviewed the coverage including the action plans given to address the issues and the implementation status.

  Major findings of internal investigations with recommendations of the management were discussed by the Committee in detail.

  The Audit Committee reviewed the independence, objectivity & performance of the Group Audit function and the adequacy of its resources. The Audit Committee also evaluated the performance of Vice President Group Audit and reviewed the performance of the senior staff members of the Group Audit function.

  Group Audit Charter and Audit Manual

  The Group Audit function is governed by the Group Audit Charter which defines the mission, authority, responsibility, independence, reporting, commitment and access in order to assist Group Audit to discharge its function independently. The Group Audit Charter and the Audit Manual were revised and approved in June 2017 by the Board.

  External Audit

  The Audit Committee undertook the annual evaluation of the independence and objectivity of the External Auditor and the effectiveness of the audit process.

  During the audit, the External Auditor presented to the Committee their audit approach and procedures, including matters relating to the scope of the audit and Auditor’s independence.

  The Committee reviewed the audited Financial Statements with the External Auditor responsible for expressing an opinion on its conformity with the Sri Lanka Accounting Standards.

  The Committee also reviewed the Management Letter issued by the External Auditor and the management responses thereto.

  The Audit Committee was of the view that the Non-Audit Services provided by the External Auditor were not within the category of services identified as prohibited under:

  1. 1. The guidelines issued by the Central Bank of Sri Lanka for External Auditors, relating to their statutory duties in terms of Section 39 of Banking Act No.30 of 1988 and amendments thereto.

  2. 2. The guidelines for Listed Companies on Audit and Audit Committees issued by the Securities and Exchange Commission of Sri Lanka.

  In carrying out the overseeing responsibilities, the Committee adopted the overview principles of the Basel Committee on Banking Supervision on External Audits of the Banks, issued in March 2014.

  Re-appointment of External Auditor

  The Audit Committee performed an evaluation of the External Auditor based on certain defined criteria and recommended to the Board of Directors that Messrs. Ernst and Young, Chartered Accountants, to be reappointed for the financial year ending 31st December 2018 subject to the approval of the shareholders at the next Annual General Meeting.

  Oversight on Regulatory Compliance

  The Group Audit performed verifications covering mandatory banking and other statutory requirements during their process audits ensuring that systems and procedures are in place to ensure compliance with such requirements. The Group Audit also conducted a special audit assignment on Exchange Control requirements, as a further monitoring measure.

  Good Governance and Whistle Blowing

  The Bank’s Whistle Blowing Policy was also revised in March 2017. The Policy is intended to serve as a channel of corporate fraud risk management. The policy will educate and encourage any team member who has a legitimate concern on an existing or potential “wrong doing”, done by any person within the Bank, to come forward voluntarily, and bring such concern to the notice of an independent designated authority. All appropriate procedures were in place to conduct independent investigations into incidents reported through whistle-blowing. The Whistle Blowing Policy guarantees the maintenance of strict confidentiality of the identity of the whistle- blowers.

  Evaluation of the Audit Committee

  The Audit Committee carried out a formal self-evaluation/appraisal on the effectiveness of the Committee and reported the results of the same to the other members of the Board. The Board concurred that the Committee had carried out its responsibilities in an effective and satisfactory manner.

  APPRECIATION

  The Committee wishes to convey its gratitude to former members N S Welikala and Mrs. D M A Harasgama for their valuable contribution.

  

  T L F Jayasekara
  Chairman
  Audit Committee
  20 February 2018
  Colombo

  RELATED PARTY TRANSACTIONS REVIEW COMMITTEE REPORT

  The Board appointed Related Party Transactions Review Committee is comprised of 6 Board members including a Chairman of the Committee who is an Independent Director.

  The Chief Executive Officer (CEO) attends meetings upon invitation by the Committee.

  Name of the Board Subcommittee Member	Directorship Status	Membership Status
  A W Atukorala	Independent	C
  T L F Jayasekara	Independent	M
  D S P Wikramanayake	Non Independent	M
  Mrs. Kimarli Fernando	Independent	M
  Mrs. Indrani Sugathadasa	Independent	M
  Mr. R Semasinghe	Non Independent	M
  N S Welikala (Retired w.e.f 30th April 2017)	Independent	M
  Mrs. D M A Harasgama (Resigned w.e.f 30th June 2017)	Non Independent	M

  C – Chairman, M – Member

  CHARTER OF THE COMMITTEE

  The Board of Directors of the Bank constituted a Related Party Transactions Review Committee voluntarily in December 2014 further to the provisions contained in Section 9 of the Listing Rules of the Colombo Stock Exchange (CSE) so as to ensure compliance with the Rules pertaining to Related Party Transactions as set out in the Listing Rules of the CSE, which required mandatory compliance from 1 January 2016. The composition and the scope of work of the Committee are in conformity with the provisions of the said Section in the Listing Rules.

  The Terms of Reference (TOR) of the Related Party Transactions Review Committee was approved by the Board of Directors and is reviewed annually. As part of the annual review process, the Committee reviewed the TOR in November 2017 with amendments being made with regard to Minutes and Recommendations.

  The primary objective of the Committee is to assess and consider all transactions with related parties of the Bank in order to ensure that related parties are treated on par with other shareholders and constituents of the Bank.

  The Committee carries out the following duties and responsibilities;

  • 1. Reviewing to evaluate and to determine the advisability of any Related Party Transactions except for transactions set out in Rule 9.5 of the CSE Listing Rules, that require consideration by the Committee under the Related Party Policy of the Bank;

  • 2. Approving or rejecting Related Party Transactions upon the required internal approvals being obtained.

  • 3. Determining whether the relevant Related Party Transaction is fair to, and in the best interests of, the Bank and its stakeholders; and

  • 4. Recommending to the full Board what action, if any, should be taken by the Board with respect to any Related Party Transaction.

  • 5. Recommending to the full Board where necessary that the approval of the shareholders of the Bank be obtained by way of a Special Resolution prior to the concerned transaction being entered into as specified in Section 9.1 and 9.4 of the Listing Rules, where necessary.

  COMMITTEE GUIDING PRINCIPLES

  The Committee is entrusted with evaluating and considering all transactions with related parties of the Bank except the exempted transactions as per the Listing Rules of the CSE, in order to ensure that related parties are treated on par with other shareholders and constituents of the Bank and related party transactions are evaluated according to the applicable rules and regulations. To this end the Committee shall ensure that necessary processes are in place to identify, approve, disclose and monitor related party transactions according to the provisions contained in the Board approved Related Party Transaction Policy pertaining to the Bank and its subsidiaries.

  The Committee is required to carry out the aforementioned approval of the related parties and related party transactions in line with the regulations issued by the Central Bank of Sri Lanka, the Colombo Stock Exchange and/ or Securities and Exchange Commission of Sri Lanka, the Banking Act Directions, the Companies Act requirements and the Sri Lanka Accounting Standards.

  COMMITTEE MEETINGS

  The Committee met four (04) times during the year under review, and the attendance of committee members at meetings is stated in the table on page 216 of the Annual Report. The quorum for a meeting is four (04) members.

  The proceedings of the Committee meetings are formally documented and have been regularly reported to the Board of Directors. The Board of Directors take due consideration of the comments/observations made by the Committee and the approvals granted by the Committee for Related Party Transactions.

  METHODOLOGY USED BY THE COMMITTEE

  In carrying out the duties of the Committee the Committee avoids ‘conflicts of interest’ which may arise from any transaction of the Bank with any person particularly with related parties, ensure arm’s length dealings with related parties whilst also ensuring adherence to the Corporate Governance Directions which requires the Bank to avoid engaging in transactions with related parties in a manner that would grant such parties ‘more favourable treatment’ than accorded to other constituents of the Bank carrying on the same business, in Take a closer look 279 line with the security requirements as stated in the Banking Act Directions and in compliance with the approval procedure set out in the Banking Act.

  The Committee is also guided by the Listing Rules of the CSE pertaining to Related Party Transactions, the Board approved Related Party Transaction Policy and the Terms of Reference of the Committee and when reviewing the transactions, takes into consideration the Related Party’s relationship to the Listed Entity and interest in the transaction, the material facts of the proposed transaction including the aggregate value of the same, the benefits to the Listed Entity of the proposed transaction, the availability of other sources of comparable products or services and further carries out an assessment of whether the proposed Related Party Transaction is on terms generally available to an unaffiliated third party under the same or similar circumstances.

  SUMMARY OF ACTIVITIES IN 2017

  During the preceding year the Committee approved/ratified transactions relating to the procurement of goods and services carried out by the Bank/its subsidiaries with various related parties on an ‘arms-length’ basis. The Committee also considered and approved the entering into lease agreements with related parties of the Bank and renewed the Terms of Reference of the Committee.

  The Committee noted that the Bank has not entered into any transactions as contemplated in Section 9.1.1 and 9.1.2 of the Listing Rules of the CSE and that accordingly there are no disclosures to be made in this regard in accordance with Section 9.3.2 (a) and 9.3.2 (b) of the Listing Rules of the CSE. The Committee has reviewed the Related Party Transactions of the Bank during the period of 1 January 2017 to 31 December 2017 and has thus complied with the rules pertaining to Related Party Transactions as set out in Section 9 of the Listing Rules of the CSE.

  APPRECIATION

  The Committee wishes to convey its sincere gratitude to former members Mrs. D M A Harasgama and N S Welikala for their valuable contribution to the Committee.

  

  A W Atukorala
  Chairman
  
  Related Party Transactions Review Committee
  20 February 2018
  Colombo

  BOARD CREDIT COMMITTEE REPORT

  redit Committee comprised of six Board members. During the year 2017 the Committee comprised of the following

  Composition As At 31st December 2017

  Name of the Board Subcommittee  Member	Directorship Status	Membership Status
  Mrs. Kimarli Fernando	Independent	C
  A W Atukorala	Independent	M
  A K Pathirage –	Non Independent	M
  D M R Phillips, PC	Independent	M
  Mrs. W A I Sugathadasa	Independent	M
  D Seneviratne (CEO)	Non Independent	M
  Mrs. D M A Harasgama (resigned  w.e.f. 30th June)	Non Independent	M

  C – Chairman, M – Member

  CHARTER OF THE COMMITTEE

  The Board Credit Committee (BCC) was formed in June 2017 and the Charter of the BCC was approved by the Board of Directors in July 2017 and is to be reviewed annually. As per the Charter, the scope of work includes the following,

  • Review and approve credit proposals coming under the Committee’s Delegated Level of Authority

  • Review and approve facilities of Retail Banking (under Product Program Guide) which currently require Board approval

  • Review and approve any material changes in respect of credits approved by the Committee (including changes in security/ facility terms and conditions/ interest margins/ pricing and waivers)

  • Pre-clearances of proposals (if Business Lines deem necessary) of any Board level approvals

  • Approve all Counterparty (Bank) limits falling within the policy guidelines approved by Board

  • Review and recommend to IRMC on any changes to the credit policy

  COMMITTEE GUIDING PRINCIPLES

  • Responsible to the Board of Directors

  • Business Lines and the Management Level Credit Committees are responsible for managing the risks in the areas for which they are responsible.

  • Each Member of the Committee shall be entitled to rely in good faith on the integrity of those persons from whom he or she receives information.

  COMMITTEE MEETINGS

  The Committee held four meetings, during the year under review to discuss the normal scope of work and one initial meeting to agree on the Terms of Reference. The proceedings of the Committee meetings have been reported to the Board of Directors. The attendance of details of the meetings held is stated in the table on page 216.

  METHODOLOGY USED BY THE COMMITTEE

  Review the Credit Proposals submitted by the Business Line, its risks and adequacy of pricing or covenants to mitigate the identified risks. Key staff members are required to present the proposals and answer any queries as and when required.

  SUMMARY OF ACTIVITIES IN 2017

  During the meetings held in 2017 the Committee carried out the following activities

  • Agreed on the Terms of Reference of the Committee and propose for approval of the Board of Directors

  • Reviewed Delegated Authority Limits of Committee as well as the management level credit committees and recommended changes to be incorporated in the final proposal for the approval of Board of Directors

  • Reviewed and recommended eight credit proposals for the approval of the Board of Directors

  • Reviewed and approved twelve credit proposals comprising of new facilities, annual review of revolving facilities, changes to terms and conditions of facilities already approved. In three instances requests were declined / deferred.

  • Reviewed and approved six proposals related to renewal of Bank Counter Party limits.

  

  Mrs. Kimarli Fernando
  Chairperson
  
  Board Credit Committee
  
  20 February 2018
  Colombo