The Committee focused on compliance with CBSL Directions and SLFRS on classification, recognition and measurement of financial assets and reviewed implementation of new IT projects to support them.
R Senanayake
Chairman
The composition of the Board Audit Committee (the BAC) during the year under review is given below in this section. Profiles of the members as at December 31, 2022 are given in the section on Board of Directors and profiles.
The Board approved Charter of the BAC (the Committee) clearly defines the Terms of Reference of the Committee. It is annually reviewed to ensure that new developments relating to the Committee’s functions are addressed. The Charter of the Committee was last reviewed and approved by the Board on October 18, 2022.
The Committee assists the Board in discharging its responsibilities and exercises oversight over financial reporting, internal controls and internal/external audits.
The Committee has full access to information, cooperation from Management and discretion to invite any Director or Executive Officer to attend its meetings.
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 the “Code of Best Practice on Corporate Governance”, issued by The Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) further regulate the composition, role and functions of the Committee.
The Committee is empowered by the Board to:
The Committee held eight meetings during the financial year ended December 31, 2022. Proceedings of these meetings with adequate details of matters discussed were regularly reported to the Board.
Representatives of the Bank’s External Auditors, Messrs Ernst & Young too participated in all eight (08) meetings during the year by invitation. The Committee also invited members of the Senior Management of the Bank to participate in the meetings from time to time on an as needed basis.
The Committee;
The Committee reviewed the revised policy document on Adoption of the Sri Lanka Accounting Standard SLFRS 9 on Financial Instruments during the year 2022 and made recommendations for implementation.
The Committee also followed up and monitored the progress of the implementation of IT Systems and automation of the processes for the preparation of Financial Statements as per the Sri Lanka Accounting Standards and Regulatory Requirements.
The Committee reviewed the Bank’s readiness and implementation of the Banking Act Direction No. 13 on Classification, Recognition and Measurement of Credit Facilities and No. 14 on Classification, Recognition and Measurement of Financial Assets other than Credit Facilities, issued by the CBSL.
The Committee reviewed the effectiveness of internal control mechanism in place to meet the regulatory requirements on ICAAP and the mechanism in place to ensure integrity, accuracy, and reasonableness in capital assessment process of the Bank for the year 2022, as per the Section 10 (in Pillar II – Supervisory Review Process) of the Banking Act Direction No. 01 of 2016 on “Regulatory Framework on Supervisory Review Process”.
The Committee also ensured that the Bank complies with all regulatory and legal requirements and closely scrutinised compliance with mandatory banking and other statutory requirements and the systems and procedures that are in place. The quarterly reports submitted by the Assistant General Manager – Compliance were used by the Committee to monitor compliance with all such legal and statutory requirements. The Bank’s Inspection Department has been mandated to conduct independent test checks covering all regulatory compliance requirements, as a further monitoring measure.
The Committee monitored the progress on implementation of the recommendations made in the Statutory Examination Reports of the Central Bank of Sri Lanka (CBSL) through regular follow-up reports tabled during the year 2022.
The Bank has adopted a risk-based audit approach towards assessing the effectiveness of the internal control procedures in place to identify and manage all significant risks and that these are being reviewed by the Committee. During the year, special emphasis was given to enhance the scope of internal audit work to cover testing of controls over granting debt moratoriums, relief measures introduced by the regulator and recoveries.
The Committee sought and obtained the required assurances from Business Units on the remedial action in respect of the identified risks to maintain the effectiveness of internal control procedures.
The Committee continuously reviewed progress on implementation of OneSumX software solution, an ongoing major system implementation project at the Finance Department, which is being implemented to streamline SLFRS based financial reporting. In reviewing the progress, the Committee emphasis was directed on all the components relating to ECL computation; portfolio segmentation, staging criteria, PD/LGD computation methodologies etc., and made recommendations to further improve the process.
The Committee;
Bank’s Inspection Department carried out onsite, offsite and online inspection of Business Units including four subsidiaries in Sri Lanka and operations in Bangladesh. Overseas subsidiaries namely Commercial Bank of Maldives Private Limited and CBC Myanmar Microfinance Co. Ltd. were monitored through an on-site/off-site surveillance. With the concurrence of the Board, the Bank continued to engage the services of four firms of Chartered Accountants approved by the CBSL in order to supplement the Bank’s Inspection Department in carrying out inspection assignments.
A total of 745 inspection reports on Business Units including the integrated reports of subsidiaries and overseas operations received the attention of the Committee which highlighted the operational deficiencies, risks and recommendations. The Committee evaluated the Bank’s system of internal controls and duly reported its findings to the Board.
Major findings of internal investigations with recommendations of the Management were considered and appropriate instructions issued.
The role of the Committee with regard to the external audit function of the Bank included:
The Auditors were provided with the opportunity of meeting Non-Executive Director members of the Committee separately, without any Executive Directors being present, to ensure that the Auditors had the opportunity to discuss and express their opinions openly on any matter. It provided the assurance to the Committee that the Management has provided all information and explanations requested by the Auditors, that the Management has not imposed any restrictions on their scope of work and that there had not been any disagreements between the Auditor and the Management.
At the conclusion of the audit, the Committee also met the Auditors to review their Management Letter before it was submitted to the Board and the CBSL.
The members of the Committee evaluated the Bank’s External Auditor, Messrs Ernst & Young covering key areas such as scope and delivery of audit, resources and quality assurance initiatives, during the year 2022.
Sections 3 (8) (ii) (b) and (c) of the Banking Act Direction No. 11 of 2007 stipulate the requirements to be complied with by the Bank to ensure reliability of the financial reporting system in place at the Bank.
The Committee is assisted by the External Auditor and the Inspection Department to closely monitor the procedures designed to maintain an effective internal control mechanism to provide reasonable assurance that this requirement is being complied with.
In addition, the Committee regularly monitored all exceptional items charged to the Income Statement, long outstanding items in the Bank’s chart of accounts, credit quality, risk management procedures and adherence to classification of non-performing loans and provisioning requirements specified by the CBSL. The Committee also reviewed the credit monitoring and follow-up procedures and the internal control procedures in place to ensure that necessary controls and mitigating measures are available in respect of newly identified risks.
The Committee reviewed and approved the Directors’ Statement on Internal Controls over Financial Reporting for disclosure in the Annual Report.
The Committee continuously emphasised on upholding ethical values of the staff members. In this regard, the Bank has a Code of Ethics, a Whistleblower’s Charter and an Anti-Bribery and Anti-Corruption Policy in place which ensure and encourage all staff members to be ethical, transparent and accountable and resort to whistleblowing if they suspect any wrongdoings or other improprieties. Highest standards of corporate governance and adherence to the Bank’s Code of Ethics were ensured. All appropriate procedures were in place to conduct independent investigations into incidents reported through whistleblowing or identified through other means. The Whistleblower’s Charter guarantees the maintenance of strict confidentiality of the identity of the whistleblowers.
An independent evaluation of the effectiveness of the Committee was carried out by the other members of the Board during the year. Considering the overall conduct of the Committee and its contribution to the overall performance of the Bank, the Committee has been rated as highly effective.
R Senanayake
Chairman – Board Audit Committee
February 24, 2023
Eligible to attend/ Attended | |
Mr R Senanayake* Chairman |
08/08 |
Mr K Dharmasiri* Director (Retired w.e.f. January 08, 2023) |
08/08 |
Ms N T M S Cooray* Director |
08/07 |
Ms J Lee* Director |
08/08 |
Ms D L T S Wijewardena* Director |
08/07 |
Mr K D N Buddhipala Chief Financial Officer |
08/08 |
Mr J Premanath Deputy General Manager – Management Audit |
08/08 |
Mr M Jayesinghe Country Managing Partner – M/s Ernst & Young |
08/08 |
Mr P L Perera Director –Assurance M/s Ernst & Young |
08/08 |
Mr S C U Manatunge Managing Director/Chief Executive Officer (Appointed to office of the Managing Director/Chief Executive Officer w.e.f. May 12, 2022. Attended 03 meetings by invitation as the Chief Operating Officer up to May 11, 2022) |
08/08 |
Mr S Prabagar Director/Chief Operating Officer (Appointed to office of the Director/Chief Operating Officer w.e.f. May 12, 2022) |
05/05 |
Mr S Renganathan Managing Director/Chief Executive Officer (Retired w.e.f. May 11, 2022) |
03/03 |
Mr S K Hettihamu Chief Risk Officer |
|
Ms A V P K T Amarasinghe Assistant General Manager – Compliance/Compliance Officer |
|
Mr R Mihular (Senior practicing Chartered Accountant, appointed as an Independent Consultant to the Committee to provide necessary assistance in discharging its functions) Representatives of the Bank’s External Auditors, Messrs Ernst & Young |
Mr J Premanath Deputy General Manager – Management Audit |
*Independent Non-Executive Director
The Committee recommended improvements to the Bank’s Risk Management Framework and related policies and procedures were updated in consideration of anticipated changes in the economic and business environment.
Ms J Lee
Chairperson
The composition of the Board Integrated Risk Management Committee (the BIRMC) during the year under review is given below. Profiles of the members as at December 31, 2022 are given in the section on Board of Directors and profiles.
The BIRMC (the Committee) has been established by the Board of Directors, in compliance with the Section 3(6) of the Direction No. 11 of 2007, on “Corporate Governance for Licensed Commercial Banks in Sri Lanka”, issued by the Monetary Board of the CBSL under 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 line with the same, as set out in the Charter which was reviewed during December 2022, clearly setting out; the membership, authority, duties and responsibilities of the Committee as described in the “Risk Governance and Management” Section of this Annual Report.
The committee assists the Board of Directors in fulfilling its responsibilities for overseeing the Bank’s risk management framework and activities including; the review of major risk exposures and the steps taken to monitor and control those exposures pertaining to the myriad of risks faced by the Bank in its business operations. Duties of the Committee include; determining the adequacy and effectiveness of such measures, and ensuring that the actual overall risk profile of the Bank conforms to the desirable risk profile of the Bank, as defined by the Board. Material risk types within specific risks that the Bank may face due to existing risks or forward looking emerging risks that require action to minimise their impacts in future are given special attention.
All key risks such as; Credit, Operational, Market, Liquidity, Information Technology, Strategic, etc. are assessed by the Committee regularly through a set of defined risk indicators. The Committee works very closely with the Key Management Personnel and the Board in fulfilling its statutory, fiduciary and regulatory responsibilities for risk management. The risk profile of the Bank is communicated to the Board of Directors periodically through the Risk Assessment report following each Committee meeting.
In discharging the above duties and responsibilities vested, the Committee reviewed significant risks comprising of Credit, Operational, Market, Liquidity, Information Technology, Strategic, and other Emerging risk categories during the year. The activities carried out by the Committee are appended below;
During the year under review, the Committee held seven meetings in total, four meetings on a quarterly basis and three additional meetings specifically to discuss the Internal Capital Adequacy Assessment process and Recovery Plan Document of the Bank.
Proceedings of the Committee meetings which also included activities under its Charter were regularly reported to the Board of Directors.
Ms J Lee
Chairperson – Board Integrated Risk Management Committee
February 24, 2023
Eligible to attend/ Attended | |
Ms J Lee* Chairperson of the BIRMC (Appointed as Chairperson w.e.f. March 10, 2022) |
07/07 |
Mr S C U Manatunge Managing Director/Chief Executive Officer (Appointed to office of the Managing Director/Chief Executive Officer and to BIRMC w.e.f. May 12, 2022. Attended 01 meeting by invitation as the Chief Operating Officer up to May 11, 2022) |
07/07 |
Mr K Dharmasiri* Director (retired w.e.f. January 08, 2023) |
07/07 |
Mr L D Niyangoda* Director |
07/07 |
Mr R Senanayake* Director |
07/07 |
Ms D L T S Wijewardena* Director |
07/03 |
Dr S Selliah* Director (Appointed to BIRMC w.e.f. April 29, 2022) |
06/05 |
Mr S Renganathan Former Managing Director/Chief Executive Officer (Retired w.e.f. May 11, 2022) |
01/01 |
Mr S K K Hettihamu Chief Risk Officer |
Mr S Prabagar Director/Chief Operating Officer (Appointed to office of the Director/Chief Operating Officer w.e.f. May 12, 2022) |
06/06 |
Ms A V P K T Amarasinghe Assistant General Manager – Compliance/Compliance Officer |
|
Mr K S A Gamage Assistant General Manager – Information Technology: Operations |
Mr K D N Buddhipala Chief Financial Officer |
*Independent Non-Executive Director
The Committee continued to work closely with the Board of Directors on matters assigned to it and duties and responsibilities delegated to it in terms of its Terms of Reference.
Prof A K W Jayawardane
Chairman
The composition of the Board Nomination Committee (the BNC) during the year under review is given in the third column of this page. Profiles of the members as at December 31, 2022 are given in the section on Board of Directors and profiles.
The BNC (the Committee) was established by the Board of Directors in compliance with the Clause 3 (6) (iv) of Banking Act Direction No. 11 of 2007 on “Corporate Governance for Licensed Commercial Banks in Sri Lanka” issued by the Monetary Board of the Central Bank of Sri Lanka (CBSL) under powers vested in the Monetary Board in terms of Section 46 (1) of the Banking Act No. 30 of 1988, as amended. The Committee was established to ensure Board’s oversight and control over selection of Directors, Chief Executive Officer and Key Management Personnel. The Composition and the scope of work of the Committee are in line with the Terms of Reference
The Committee shall;
Nine Committee meetings were held during the year under review.
The Committee obtained declarations from all Directors through a prescribed format confirming their status of independence. Affidavits signed by each of the Directors through a prescribed format were obtained with the assistance of the Company Secretary to satisfy an annual requirement imposed under a Direction issued by the Central Bank of Sri Lanka (CBSL) and the originals of same were furnished to the Director of Bank Supervision of the CBSL to enable the CBSL to re-assess their fitness and propriety.
As provided for in the Articles of Association of the Bank, the Committee recommended retirement by rotation of two Directors, for approval of the Board.
Upon the retirement of Justice K Sripavan, former Chairman of the Bank during the year and after careful evaluation, the Committee recommended the appointment of the new Chairman and the new Deputy Chairman. Subsequently, the Committee identified suitable persons to fill a further vacancy created in the Board upon the retirement of a Director and after carefully evaluating several candidates, recommended the appointment of Dr S Selliah as a new Non-Executive/ Independent Director to the Board inApril 2022.
The Committee having noted the vacancy arising upon the retirement of Mr S Renganathan, former Managing Director/Chief Executive Officer of the Bank recommended the appointment of Mr S C U Manatunge as the new Managing Director/Chief Executive Officer in May 2022.
The Committee identified suitable persons to fill the vacancies arising in the Board and upon careful evaluation of several candidates, recommended the appointment of Mr S Prabagar as new Executive Director/Chief Operating Officer. The Succession Plan developed to ensure orderly succession of key management positions was recommended by the Committee for the approval of the Board.
Based on recommendations made by the Committee, the Board approved appointment of a Chief Information Officer. In addition, based on the recommendations of the Committee, the Board approved the appointment of Deputy General Manager – Corporate Banking, the promotions of the Chief Risk Officer and the Assistant General Manager – Management Audit to the grade of Deputy General Manager, the re-designation of the Deputy General Manager – Marketing as “Deputy General Manager – Retail Banking and Marketing”, and the appointment of one Assistant General Manager – Corporate Banking to fill in the vacancy.
The Committee continued to work closely with the Board of Directors on matters assigned to it and duties and responsibilities delegated to it in terms of the BNC Terms of Reference and reported back to the Board of Directors with its recommendations.
Prof A K W Jayawardane
Chairman – Board Nomination Committee
February 24, 2023
Eligible to attend/ Attended | |
Prof A K W Jayawardane* Chairman (Appointed as the Chairman of the BNC w.e.f. March 10, 2022) |
09/09 |
Mr S Muhseen* Director (Appointed to BNC w.e.f. March 10, 2022) |
07/07 |
Ms J Lee* Director |
09/09 |
Dr S Selliah* Director (Appointed to BNC w.e.f. June 29, 2022) |
01/01 |
Justice K Sripavan* Former Chairman (Relinquished office w.e.f. March 01, 2022) |
02/02 |
Mr S C U Manatunge Managing Director/Chief Executive Officer (Appointed to office of the Managing Director/Chief Executive Officer w.e.f. May 12, 2022 ) |
03/03 |
Mr S Renganathan Former Managing Director/Chief Executive Officer (Retired w.e.f. May 11, 2022) |
06/06 |
Mr R A P Rajapaksha Company Secretary |
*Independent Non-Executive Director
At the conclusion of a review of performance of the members of the Corporate Management in 2021, the Committee carefully perused and agreed on their Key Performance Areas and the respective KPIs for 2022.
Prof A K W Jayawardane
Chairman
The composition of the Board Human Resources and Remuneration Committee (the BHRRC) during the year under review is given below in this section. Profiles of the members as at December 31, 2022 are given in the section on Board of Directors and profiles.
The BHRRC (the Committee) is vested with power to evaluate, assess, decide and recommend to the Board of Directors on any matter that may affect the Human Resources Management of the Bank and shall specifically include:
The overall focus of the Committee:
The Committee recognises rewards as one of the key drivers influencing employee behaviour, thereby impacting business results. Therefore, the reward programmes are designed to attract, retain and motivate employees to perform by linking performance to demonstrable performance-based criteria. In this regard, the Committee evaluates the performance of the Managing Director and Key Management Personnel against the pre-agreed targets and goals that balance short-term and long-term financial and strategic objectives of the Bank.
The Bank’s variable (bonus) pay plan is determined according to the overall achievements of the Bank and pre-agreed individual targets, which are based on various performance parameters. The level of variable pay is set to ensure that individual rewards reflect the performance of the Bank overall, the particular business unit and individual performance. The Committee makes appropriate adjustments to the bonus pool in the event of over or under achievement against predetermined targets. In this regard, the Committee can seek external independent professional advice on matters falling within its purview.
Further, the Committee may seek external agencies to carry out salary surveys to determine the salaries paid to staff vis-à-vis the market position, enabling the Committee to make informed decisions regarding the salaries and perquisites in the Bank.
The Committee held four meetings during the year under review and the proceedings of the Committee meetings which also included activities under its Terms of Reference were regularly reported to the Board of Directors with its comments and observations.
The Committee determined the bonus payable for 2021 performance according to the Variable Pay Plan (VPP) for Executive staff and the grant of annual increments to the Executive staff who are not covered by the Collective Agreement. Performance of the members of the Corporate Management during the financial year 2021 including that of the Managing Director/Chief Executive Officer, and the Chief Operating Officer were reviewed. At the conclusion of the review process for 2021, the Key Performance Areas and the respective KPIs of the Corporate Management members set for 2022 were carefully perused by the Committee and agreed on, subject to changes.
Consequent to the retirement of the Managing Director, the Committee deliberated and recommended the salary and other perquisites applicable to the newly appointed Managing Director and Chief Operating Officer for the approval of the Board.
Requests by the Pensioners for a revision of pension was considered and the revisions were recommended for the approval of the Board. Revision of staff loans to all categories of permanent staff, due for revision during the year was granted. This revision is granted to staff once in three years. The Committee considered the recommendation made by the Management to grant a special economic relief allowance for permanent staff members up to the Junior Executive Officer Grade taking into account the current economic situation in the country, and recommended same for the approval of the Board.
The effect of Minimum Retirement Age of Workers Act No: 28 was considered by the Committee. The proposal by the Management, for inclusion of such employees who received an extension of service due to the implementation of Act, in the Defined Contribution Pension Fund for the remaining service period was recommended by the Committee for the approval of the Board.
The Committee discussed the effect of enhanced PAYE tax effective from January 2023 by the government and its effect on the employees and deferred action until the industry response in terms of relief can be more clearly ascertained.
Prof A K W Jayawardane
Chairman – Board Human Resources and Remuneration Committee
February 24, 2023
Eligible to attend/ Attended | |
Prof A K W Jayawardane* Chairman (Appointed as the Chairman of the BHRRC w.e.f. March 10, 2022) |
04/04 |
Mr S Muhseen* Director (Appointed to BHRRC w.e.f. March 10, 2022) |
04/04 |
Ms J Lee* Director |
04/04 |
Dr S Selliah* Director (Appointed to BHRRC w.e.f. June 29, 2022) |
02/02 |
Justice K Sripavan* Former Chairman (Relinquished office w.e.f. March 01, 2022) |
00/00 |
Mr S C U Manatunge Managing Director/Chief Executive Officer (Appointed to office of the Managing Director/Chief Executive Officer w.e.f. May 12, 2022) Participated in all deliberations except those matters impacting his own terms and conditions of employment |
03/03 |
Mr S Renganathan Former Managing Director/Chief Executive Officer(Retired w.e.f. May 11, 2022) Participated in all deliberations except those matters impacting his own terms and conditions of employment. |
01/01 |
Mr U I S Tillakawardana Deputy General Manager – Human Resource Management |
*Independent Non-Executive Director
Arrangements were made to disseminate the Related Party Transactions Policy among all relevant stakeholders and obtain their acknowledgments to ensure that they have read and understood the applicable regulatory requirements.
Prof A K W Jayawardane
Chairman
During the year under review, the Board Related Party Transactions Review Committee (the BRPTRC) comprised of Independent Non-Executive Directors (in conformity with Section D 4.2 of the Code of Best Practice on Corporate Governance 2017 issued by CA Sri Lanka).
The composition of the BRPTRC during the year under review is given in the third column of this page. Profiles of the members as at December 31, 2022, are indicated in the section on Board of Directors and profiles.
Demonstrating its commitment to good governance, the Board of Directors of the Bank (being one of the few listed entities to do so) formed the BRPTRC (the Committee) in 2014 by early adoption of the Code of Best Practice on Related Party Transactions as issued by the Securities and Exchange Commission (SEC) of Sri Lanka which became mandatory for all listed entities from January 01, 2016.
The Committee assists the Board in reviewing all related party transactions (RPTs) carried out by the Bank, all its subsidiaries and the associate in the Group to ensure that the interests of shareholders as a whole are taken into account by the Bank when entering into RPTs and also to ensure that Directors, Key Management Personnel (KMP) and shareholders with substantial shareholding of the Bank do not secure any undue advantage due to their positions, thereby avoiding any conflicts of interest. The Committee also assists the Board in maintaining transparency in relation to RPTs with the required disclosures.
The mandate of the Committee includes inter-alia, the following:
During the year, as a part of Bank’s review of policies, the RPTs Policy was reviewed and updated in May and November 2022. The amended RPTs Policy was approved by the Board of Directors in June and in December 2022 and implemented. Arrangements were also made to disseminate the amended RPTs Policy among all relevant stakeholders and obtain their acknowledgements to ensure that they have read and understood the applicable regulatory requirements relating to identifying, capturing and reporting of RPTs. In addition, the Terms of Reference of the Committee was also reviewed and revised to capture new developments in November 2022 and was approved by the Board of Directors in December 2022. Further, the Committee deliberated and took several steps to improve the accuracy of the process involved in submitting the information on RPTs.
The Committee held four meetings during the year under review as required by Section 9.2.4 of the Listing Rules of the CSE. The Committee reviewed all RPTs carried out during the year at its quarterly meetings and the proceedings of the Committee meetings, which also included activities under its Terms of Reference, were regularly reported to the Board of Directors with its comments and observations.
Prof A K W Jayawardane
Chairman – Board Related Party Transactions Review Committee
February 24, 2023
Eligible to attend/ Attended | |
Prof A K W Jayawardane* Chairman (Appointed as a Member/Chairman of the BRPTRC w.e.f. March 10, 2022) |
03/03 |
Mr L D Niyangoda* Director |
04/04 |
Mr R Senanayake* Director |
04/04 |
Justice K Sripavan* Former Chairman (Relinquished office w.e.f. March 01, 2022) |
01/01 |
Mr T L B Hurulle* Director (Retired w.e.f. March 16, 2022) |
01/01 |
Mr S C U Manatunge Managing Director/Chief Executive Officer(Appointed to office of the Managing Director/Chief Executive Officer w.e.f. May 12, 2022. Attended 01 meeting by invitation as the Chief Operating Officer up to May 11, 2022) |
04/04 |
Mr S Prabagar Director/Chief Operating Officer (Appointed to office of the Director/Chief Operating Officer w.e.f. May 12, 2022) |
03/03 |
Mr S Renganathan Former Managing Director/Chief Executive Officer (Retired w.e.f. May 11, 2022) |
01/01 |
*Independent Non-Executive Director
In the challenging operating environment, the Committee set the lending directions of the Bank for prudent management of credit growth, while aiming at maintaining and improving credit quality.
Prof A K W Jayawardane
Chairman
The composition of the Board Credit Committee (the BCC) during the year under review is given in the third column of this page. Profiles of the members as at December 31, 2022 are given in the section on Board of Directors and profiles.
The BCC (the Committee) shall assist the Board in effectively fulfilling its responsibilities relating to Credit Direction, Credit Policy and Lending Guidelines of the Bank in order to inculcate healthy lending culture, standards and practices and ensure relevant rules, regulations and directions issued by the appropriate authorities are complied with.
The Committee held Twelve meetings during the year under review. The proceedings of the committee meetings were regularly reported to the Board of Directors. In a challenging environment due to the effects of the COVID-19 pandemic affecting the global and local business environment as well as the unprecedented macroeconomic challenges & uncertainties faced by the country, the Committee set the lending directions of the Bank for prudent management of credit growth, while aiming at maintaining and improving credit quality.
The Committee approved credit proposals above a predetermined limit, recommended credit proposals and other credit reports intended for approval/perusal by the Board of Directors after careful scrutiny. These tasks were carried out by the Committee in line with the Bank’s lending policies and credit risk appetite to ensure that the lending portfolios were managed in line with the stipulated credit risk parameters set by the Board of Directors while achieving the Bank’s lending targets.
Prof A K W Jayawardane
Chairman – Board Credit Committee
February 24, 2023
Eligible to attend/ Attended | |
Prof A K W Jayawardane* Chairman (Appointed to the BCC w.e.f. March 01, 2022 and appointed as the Chairman w.e.f. March 10, 2022) |
10/10 |
Mr K Dharmasiri* Director (Retired w.e.f. January 08, 2023) |
12/12 |
Ms N T M S Cooray* Director |
12/12 |
Mr S C U Manatunge Managing Director/Chief Executive Officer (Appointed to office of the Managing Director/Chief Executive Officer w.e.f. May 12, 2022. Attended 04 meetings as the Chief Operating Officer up to May 11, 2022) |
12/12 |
Mr S Muhseen* Director (Appointed to BCC w.e.f. March 10, 2022) |
10/09 |
Mr S Prabagar Director/Chief Operating Officer (Appointed to office of the Director/Chief Operating Officer and to BCC w.e.f. May 12, 2022) |
08/08 |
Justice K Sripavan* Former Chairman (Relinquished office w.e.f. March 01, 2022) |
02/02 |
Mr S Renganathan Former Managing Director/Chief Executive Officer(Retired w.e.f. May 11, 2022) |
04/04 |
Mr R A P Rajapaksha Company Secretary |
*Independent Non-Executive Director
The responsibilities of the Committee assumed great significance in 2022, as the sharp deterioration of the macro-economic framework of Sri Lanka necessitated a proactive and dynamic approach to mitigate multiple economic shocks.
S Muhseen
Chairman
The composition of the Board Investment Committee (the BIC) during the year under review is given below in this section. Profiles of the members as at December 31, 2022 are given in the section on Board of Directors and profiles.
The BIC (the Committee) Investment Committee is responsible for the treasury and investment activities of the Bank. The Committee reviews and approves the policies and operating parameters for treasury and investment activities. It evaluates proposed treasury and investment strategies, reviews significant investment decisions, and oversees the performance of the treasury and investment portfolios. The Committee also initiates discussions and reviews the capital management of the Bank.
Given its oversight on treasury activities, the Committee evaluates the Bank’s overall liquidity management operations, treasury investments and borrowing activities, and capital adequacy. The Bank’s borrowing proposals are evaluated together with the liquidity requirement and deployment by the Committee, and suitable recommendations are provided.
To meet the core objectives of the Committee, the investment portfolio performance is closely monitored via regular updates from Treasury and Investment Banking Divisions. Suitable treasury and investment proposals are approved or recommended to the Board of Directors. The Committee also evaluates the impact of possible macroeconomic developments and trends to the profitability, liquidity, balance sheet, and capital through sensitivity and scenario analysis. The Committee also provides expert views and assistance to the Management with regards to the treasury and investment portfolio risks and performance.
The Committee meets monthly and reviews progress of strategic and significant investments, the liquidity situation of the bank, the currency exposures of the portfolio, and impact on performance and capital. Evaluation of current market developments and the economic outlook of the markets the bank operates in, to review the current portfolio and for new investment strategies. The Committee actively reviews the monthly performance of the Treasury and Investment Banking Division, where the interest rate risk, re-pricing risk, liquidity risk, currency risk and other market risks are discussed.
The Committee from time to time would issue instructions to executive officers of the Bank on investment related activities.
The responsibilities of the Committee assumed great significance in 2022, as the sharp deterioration of the macro economic framework of Sri Lanka created an extremely adverse operating environment for the Bank. The sovereign default, sharp depreciation of LKR against USD, absence of money and foreign exchange markets for a prolonged period of time, deterioration of capital adequacy and liquid assets ratios, sharp increase in the interest rates all created a situation where the Committee needed to have very close and frequent engagement with the Bank management to meet rapidly evolving conditions. The Committee provided recommendations and guidance to the Management and the Board of Directors on the matters coming under its purview constantly in areas of liquidity management, investments, market risk mitigation while constantly anticipating and evaluating possible market shocks. In addition, the Committee kept abreast of the discussions with the Government of Sri Lanka (GOSL) and CBSL on market developments, discussions on debt restructuring, FX risk management and financing.
Following key areas where the Committee was required to recommend and make decisions can be highlighted.
S Muhseen
Chairman – Board Investment Committee
February 24, 2023
Eligible to attend/ Attended | |
Mr S Muhseen* Chairman (Appointed as Chairman of the BIC w.e.f. March 10, 2022) |
13/13 |
Ms Judy Lee* Director |
13/12 |
Mr S C U Manatunge Managing Director/Chief Executive Officer (Appointed to office of the Managing Director/Chief Executive Officer w.e.f. May 12, 2022. Attended 04 meetings as the Chief Operating Officer up to May 11, 2022) |
13/12 |
Mr K Dharmasiri* Director (Retired w.e.f. January 08, 2023) |
13/13 |
Ms N T M S Cooray* Director |
13/12 |
Mr S Prabagar Director/Chief Operating Officer (Appointed to office of the Director/Chief Operating Officer and to the BIC w.e.f. May 12, 2022) |
09/09 |
Mr S Renganathan Former Managing Director/Chief Executive Officer (Retired w.e.f. May 11, 2022) |
04/04 |
Mr K D N Buddhipala Chief Financial Officer |
|
Mr S K K Hettihamu Chief Risk Officer |
|
Mr S B Pananwala Assistant General Manager – Corporate Banking |
Mr A Wijesiriwardane Deputy General Manager –Treasury |
*Independent Non-Executive Director
Dr S Selliah, Director was appointed a member of the Committee w.e.f. February 10, 2023.
The Committee focused on improving digital reach, enterprise alignment, process improvements and compliance which are the key drivers of the Bank towards a digital era while ensuring the robustness of the IT infrastructure of the Bank.
S Muhseen
Chairman
The composition of the Board Technology Committee (the BTC) during the year under review is given below in this section. Profiles of the members as at December 31, 2022 are given in the section on Board of Directors and profiles.
The primary responsibility of the BTC (the Committee) is to assist the Board in performing its oversight function on all Digital and Technological strategies of the Bank and to evaluate all IT-related procurement proposals and submit its recommendations to the Board.
The Committee has been empowered to:
The Committee held seven meetings during 2022, and the proceedings of the Committee meetings were regularly reported to the Board of Directors with its comments and observations. The Committee focused on improving the following areas, which are the key drivers of the Bank towards a digital era while ensuring the robustness of the IT infrastructure of the Bank.
Digital reach, Enterprise alignment, Process Improvements and Compliance have been identified as critical factors in taking the banking business to the next level by enhancing customer convenience on day-to-day banking services. To cater to this requirement, the Bank has implemented comprehensive multiple technical roadmaps. In the year 2022, the Bank was able to implement the following key initiatives to excel in the banking operation.
Furthermore, the Agile way of working at IT R&D has supported to cater to the business units with the targeted priorities and full transparency. The productivity and quality of deliveries have been greatly improved compared to the previous year.
Digital Infrastructure plays a vital role in providing an uninterrupted service and serves the ever-increasing customer expectations. Cognisant of the importance of the infrastructure, the Information Technology Department has identified and implemented the following key initiatives to enhance the internal system capabilities and streamline the hardware usage;
Enterprise Architecture focus has been set to align all the banking systems and infrastructure to the industry standards. The Business, Data, Application, and Infrastructure architectures have been considered as the key focus verticals incorporating IT standards with security compliance.
The Bank has initiated several key IT projects during the year, including Core Banking upgrade, New Treasury System Implementation, Loan Origination system version upgrade, Open banking for Maldives, Enhancing Digital Banking platform, Implementing Flash for all countries with brand-new Microservices architecture, Early Warning Signals for lending portfolio, AI and Data Science use cases, Robotic process automation for internal operations, Recoveries system implementation, Fraud monitoring system implementation, Employee self-service mobile app, ATM Channel manager, ITM Version upgrade, Q + Feature addition and Compliance related projects (GoAML, ITRS, RTGS).
S Muhseen
Chairman – Board Technology Committee
February 24, 2023
Eligible to attend/ Attended | |
Mr S Muhseen* Chairman (Appointed as the Chairman of the BTC w.e.f. March 10, 2022) |
07/07 |
Mr S C U Manatunge Managing Director/Chief Executive Officer (Appointed to office of the Managing Director/Chief Executive Officer w.e.f. May 12, 2022. Attended 03 meetings as the Chief Operating Officer up to May 11, 2022) |
07/07 |
Mr K Dharmasiri* Director (Retired w.e.f. January 08, 2023) |
07/07 |
Ms D L T S Wijewardena* Director |
07/05 |
Mr S Prabagar Director/Chief Operating Officer (Appointed to office of the Director/Chief Operating Officer and to the BTC w.e.f. May 12, 2022) |
04/03 |
Prof A K W Jayawardane* Former Chairman of the BTC (Resigned from the BTC w.e.f. March 09, 2022) |
01/01 |
Mr S Renganathan Former Managing Director/Chief Executive Officer (Retired w.e.f. May 11, 2022) |
03/02 |
Mr T L B Hurulle* Director (Retired w.e.f. March 16, 2022) |
02/01 |
Mr L H Munasinghe Deputy General Manager – Retail Banking & Marketing |
|
Mr P K A S K Gunawardhana Chief Information Officer |
|
Mr K S A Gamage Assistant General Manager – Information Technology – Operations |
|
Mr T P Suraweera Assistant General Manager – Operations |
|
Mr U K P Banduwansa Head of Retail Products & Digital Channels |
|
Mr K Mediwake Chief Executive Officer – CBC Tech Solutions Limited |
Mr M V P Thotagammana Assistant General Manager – Information Technology – (R&D) |
*Independent Non-Executive Director
The Committee deliberated on the potential stress on the capital adequacy arising due to many external factors and measures that need to be taken to augment capital adequacy.
Prof A K W Jayawardane
Chairman
The composition of the Board Strategy Development Committee (the BSDC) during the year under review is given below in this section. Profiles of the members as at December 31, 2022 are given in the section on Board of Directors and profiles.
The Committee was established to have an overall Bank-wide strategic management oversight.
The Committee is empowered:
The BSDC met more frequently during the year (six meetings) compared to the minimum requirement of four meetings as per the Terms of Reference to offer guidance in the strategic decision-making process of the Bank in a challenging socio economic environment which prevailed during 2022.
The BSDC assisted the Board by evaluating the business strategies and recommending to strengthen core competencies of the Bank.
The Committee carried out the following activities during the year 2022:
Important decisions taken at the Committee meetings and deliberations on activities under the Terms of Reference were regularly reported to the Board of Directors for information/approval.
Prof A K W Jayawardane
Chairman – Board Strategy Development Committee
February 24, 2023
Eligible to attend/ Attended | |
Prof A K W Jayawardane* Chairman (Appointed as the Chairman of the BSDC w.e.f. March 10, 2022) |
06/06 |
Mr S Muhseen* Director |
06/06 |
Mr S C U Manatunge Managing Director/Chief Executive Officer (Appointed to office of the Managing Director/Chief Executive Officer and to the BSDC w.e.f. May 12, 2022) |
05/05 |
Mr K Dharmasiri* Director (Retired w.e.f. January 08, 2023) |
06/06 |
Mr L D Niyangoda* Director |
06/06 |
Ms N T M S Cooray* Director |
06/04 |
Ms J Lee* Director |
06/06 |
Mr R Senanayake* Director |
06/06 |
Dr S Selliah* Director (Appointed to BSDC w.e.f. April 29, 2022) |
04/04 |
Justice K Sripavan* Former Chairman (Relinquished office w.e.f. March 01, 2022) |
01/01 |
Mr S Renganathan Former Managing Director/Chief Executive Officer (Retired w.e.f. May 11, 2022) |
03/02 |
Mr R A P Rajapaksha Company Secretary |
*Independent Non-Executive Director