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Role of Board of Directorsin StrengtheningCorporate Governance inBanksRole of Board of Directorsin StrengtheningCorporate Governance inBanks
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Role of the Board ofDirectorsRole of the Board ofDirectors
Setting Tone at the TopSetting Tone at the Top
Defining Business PhilosophyDefining Business Philosophy
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Independence of BoardIndependence of Board
Independent of the influence ofManagementIndependent of the influence ofManagement
Clearly know their responsibilities andpowersClearly know their responsibilities andpowers
Focus on Policy Making and generaldirectionFocus on Policy Making and generaldirection
No role in day to day affairsNo role in day to day affairs
No conflict of interestNo conflict of interest
Understand the bank’s risk profileUnderstand the bank’s risk profile
-training programs for Board members-training programs for Board members
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Board Sub-committeesBoard Sub-committees
Preferably comprising non-executive boardmembers, in the areas of:Preferably comprising non-executive boardmembers, in the areas of:
–Audit–Audit
–Risk Management–Risk Management
–Human Resource–Human Resource
–Credit–Credit
–Others–Others
With well defined objectives, authorities and tenureWith well defined objectives, authorities and tenure
Without indulging in day to day affairsWithout indulging in day to day affairs
Full board to review their performanceFull board to review their performance
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Responsibilities of BoardResponsibilities of Board
Setting the:Setting the:
–Objectives–Objectives
–Vision and Mission statement–Vision and Mission statement
–Strategy & Business Plan–Strategy & Business Plan
Providing oversight to ensure achievementof organizational objectivesProviding oversight to ensure achievementof organizational objectives
-within the legal and regulatory frameworkand high business ethics-within the legal and regulatory frameworkand high business ethics
Standing accountable to stakeholdersStanding accountable to stakeholders
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Responsibilities (Contd.)Responsibilities (Contd.)
Appointing key executives – based onFPT criteriaAppointing key executives – based onFPT criteria
Defining powers and responsibilities ofsenior managementDefining powers and responsibilities ofsenior management
Succession planning for key positionsSuccession planning for key positions
Disclosing conflict of interestDisclosing conflict of interest
Ensuring disclosure to promotetransparency and market disciplineEnsuring disclosure to promotetransparency and market discipline
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Responsibilities –Policy FrameworkResponsibilities –Policy Framework
Formulating policies :Formulating policies :
–Credit–Credit
–Investments and Treasury Management–Investments and Treasury Management
–Human Resources–Human Resources
–Internal Audit and Control–Internal Audit and Control
–Compliance–Compliance
–Risk Management–Risk Management
–Other areas–Other areas
Communication and complianceCommunication and compliance
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Responsibilities – Internal AuditResponsibilities – Internal Audit
Creation of separate department ofInternal Audit, withCreation of separate department ofInternal Audit, with
–Professional Staff–Professional Staff
–Full Scope coverage–Full Scope coverage
–Audit Charter & Manual–Audit Charter & Manual
Head of Internal Audit reporting to theboard or the Audit CommitteeHead of Internal Audit reporting to theboard or the Audit Committee
Appointment and remuneration of Head ofInternal AuditAppointment and remuneration of Head ofInternal Audit
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Responsibilities - MISResponsibilities - MIS
Ensuring existence of an effective ManagementInformation SystemEnsuring existence of an effective ManagementInformation System
For keeping itself abreast withFor keeping itself abreast with
–Activities–Activities
–Operating Performance & financial condition–Operating Performance & financial condition
–Operating environment–Operating environment
–Major Risks–Major Risks
Evaluating Performance of the management -based on certain benchmarksEvaluating Performance of the management -based on certain benchmarks
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Responsibilities – Board MeetingsResponsibilities – Board Meetings
At least quarterly, preferably morefrequentlyAt least quarterly, preferably morefrequently
Individual Directors to attend at leasthalf of the meetings in a yearIndividual Directors to attend at leasthalf of the meetings in a year
Information through agenda items inadvanceInformation through agenda items inadvance
Recording minutes of deliberations indetailRecording minutes of deliberations indetail
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Responsibilities - OthersResponsibilities - Others
Reviewing the effectiveness ofInternal ControlsReviewing the effectiveness ofInternal Controls
Strengthening Risk ManagementStrengthening Risk Management
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Responsibilities - OthersResponsibilities - Others
Annual Financial Statements :Annual Financial Statements :
-Coverage of Directors’ Report-Coverage of Directors’ Report
-Statement on Internal Controls-Statement on Internal Controls
-Risk Management Framework-Risk Management Framework
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Responsibilities - OthersResponsibilities - Others
IRAF ReportingIRAF Reporting
Regulatory complianceRegulatory compliance
Basel-II implementationBasel-II implementation
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Thank YouThank You