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The Board of Directors is responsible for approving the credit risk strategy of the bank in line with its overall business strategy. The credit strategy should be aimed at determining the credit risk appetite of the bank. The overall credit strategy and related policy matters shall be clearly outlined in a policy document to be called “Credit Policy”. Specifically, the Board’s responsibilities with regard to creditgranting function of the bank would include the following:
i.
Developing a credit strategy for the bank to spell out its overall risk appetite in relation to credit risk;
ii.
Ensuring that the bank has a well-defined Credit Policy duly approved by the Board;
iii.
Forming a Board Committee headed by a non-executive director to assist the Board in overseeing the credit risk management process and defining its terms of reference (this Committee may also monitor other risks in addition to credit risk);
iv.
Ensuring that the bank has an effective credit risk management framework for the identification, measurement, monitoring and control of credit risk;
v.
Requiring the management to ensure that the staff involved in credit appraisal, monitoring, review and approval processes possess sound expertise and knowledge to discharge their responsibilities;
vi.
Ensuring that bank has adequate policies and procedures in place to identify and manage credit risk inherent in all products and activities including the risks of new products and activities before being introduced or undertaken. Such policies and procedures should also provide guidance on evaluation and approval of any new products and activities before being introduced or undertaken by the bank;
vii.
Ensuring that the bank’s remuneration policies do not contradict its credit risk strategy. In this regard, the board should ensure that the bank’s credit processes are not weakened as a result of rewarding unacceptable behavior such as generating short-term profits while deviating from credit policies or exceeding established limits;
viii.
Ensuring that the bank’s overall credit risk exposure is maintained at prudent levels;
