Role%20of%20Board%20of%20Directors%20in%20Strengthening%20Corporate%20Governance%20in%20Banks

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Role of Board of Directorsin Strengthening
Corporate Governance in Banks
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Role of the Board of Directors

• Setting Tone at the Top
• Defining Business Philosophy

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Independence of Board

• Independent of the influence of Management
• Clearly know their responsibilities and powers
• Focus on Policy Making and general direction
• No role in day to day affairs
• No conflict of interest
• Understand the banks risk profile
• - training programs for Board members

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Board Sub-committees

• Preferably comprising non-executive board
  members, in the areas of
• Audit
• Risk Management
• Human Resource
• Credit
• Others
• With well defined objectives, authorities and
  tenure
• Without indulging in day to day affairs
• Full board to review their performance

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Responsibilities of Board

• Setting the
• Objectives
• Vision and Mission statement
• Strategy Business Plan
• Providing oversight to ensure achievement of
  organizational objectives
• - within the legal and regulatory framework and
  high business ethics
• Standing accountable to stakeholders

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Responsibilities (Contd.)

• Appointing key executives based on FPT criteria
• Defining powers and responsibilities of senior
  management
• Succession planning for key positions
• Disclosing conflict of interest
• Ensuring disclosure to promote transparency and
  market discipline

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Responsibilities Policy Framework

• Formulating policies
• Credit
• Investments and Treasury Management
• Human Resources
• Internal Audit and Control
• Compliance
• Risk Management
• Other areas
• Communication and compliance

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Responsibilities Internal Audit

• Creation of separate department of Internal
  Audit, with
• Professional Staff
• Full Scope coverage
• Audit Charter Manual
• Head of Internal Audit reporting to the board or
  the Audit Committee
• Appointment and remuneration of Head of Internal
  Audit

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Responsibilities - MIS

• Ensuring existence of an effective Management
  Information System
• For keeping itself abreast with
• Activities
• Operating Performance financial condition
• Operating environment
• Major Risks
• Evaluating Performance of the management - based
  on certain benchmarks

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Responsibilities Board Meetings

• At least quarterly, preferably more frequently
• Individual Directors to attend at least half of
  the meetings in a year
• Information through agenda items in advance
• Recording minutes of deliberations in detail

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Responsibilities - Others

• Reviewing the effectiveness of Internal Controls
  
• Strengthening Risk Management

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Responsibilities - Others

• Annual Financial Statements
• - Coverage of Directors Report
• - Statement on Internal Controls
• - Risk Management Framework

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Responsibilities - Others

• IRAF Reporting
• Regulatory compliance
• Basel-II implementation

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• Thank You