7. Management Information System

Effective from 2013-02-01 - Jun 29 2013
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Banks should put in place effective management information system(MIS) to enable management to be aware, measure, monitor and control the credit risk inherent in the bank’s all on- and off-balance sheet activities. An accurate, informative and timely management information system is an important factor in the overall effectiveness of the risk management process. Banks should comply with the following guidelines in developing and strengthening the MIS for credit risk:
	i.	The system should be capable of compiling credit information both on solo and consolidated basis as well as across various credit categories and products (including off-balance sheet activities);
	ii.	The system should be able to produce all the required information to enable the management to assess quickly and accurately the level of credit risk, ensure adherence to the risk tolerance levels and devise strategies to manage the credit risk effectively;
	iii.	The system should be able to provide information on the composition of the portfolio, concentrations of credit risk, quality of the overall credit portfolio as well as various categories of the portfolio and rescheduled/restructured and “watchlist” accounts;
	iv.	The reporting system should ensure that exposures approaching pre-defined maximum risk limits/thresholds set out for individual exposures are brought to the attention of management. All exposures should be included in a risk limit measurement system;
	v.	The management information reports should be prepared by persons who are independent of the business unit(s);
The credit risk management function should monitor and report its measures of risk to appropriate levels of management, the relevant Board committee and the Board. The board should be regularly briefed on the overall credit risk exposure (including off-balance sheet activities) of the bank. The board should be provided, inter alia, the following information for its review:
	i.	The amount of credit exposures undertaken with broken down by loans categories, types of exposures, products and level of credit grades, etc.;
	ii.	A periodic report on the existing lending products, their target market, performance and credit quality as also the details of any planned new products;
	iii.	Concentrations of credit to large exposures, groups of connected parties, specific industries, economic sectors or geographic regions, etc.;
	iv.	A report on the overall quality of the credit portfolio. This may include, inter alia, details of problem loans including those on the watchlist, categories of their classification, potential loss to the bank on each significant problem loan, the level of existing and additional provisions required there against, etc.;
	v.	Details of the actions taken and planned to recover the significant problem loans as well as the status of adherence to the terms and conditions of any significant rescheduled/restructured loans;
	vi.	Such other information as may be required by the board or deemed appropriate by the management to bring to the attention of the board;
Banks should regularly review their management information systems to ensure their adequacy and effectiveness, and introduce changes wherever required.

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