Detection and Management Process (xi) Valuation Methodology of Collateral (xii) Internal Capital Adequacy Assessment Process (ICAAP). 2.26 Risk Management Practice Aligned with Basel Accord: As a Basel compliant bank, MTB follows international best practices in risk management asper Basel norms, which makes its capital more risk sensitive and resilient. Basel Committee on Banking Supervision (BCBS) has transitional arrangements to implement the Basel III standard, which is an improved version of Basel II, to ensure that, the banking sector can meet the higher capital and liquidity standards through retention of reasonable earnings and raising capital, while optimally supporting the credit needs of the economy. In line with the Basel framework, Bangladesh Bank has issued guideline on transitional arrangements for Basel III implementation in Bangladesh. The phase in arrangements for Basel III implementation in Bangladesh, introduced by 30
Bangladesh Bank, is being and will be followed by MTB. MTB is in the process to fully implement Basel III from January 2020. MTB’s capital structure is governed by the ‘Guidelines on Risk Based Capital Adequacy (RBCA) for Banks ‘issued by Bangladesh Bank (BB). RBCA guidelines encompass risk management framework of the bank by Pillar-I (Minimum Capital Requirement, MCR), Pillar-II (Supervisory Review Process, SRP) and by Pillar- III (Market disclosures). MTB has been successfully maintaining capital above the minimum capital requirement against credit risks, market risks, and operational risks. In 2016, capital to risk weighted asset ratio of MTB at consolidated level was 11.11% at the end of March, 11.80% at the end of June,11.75% at the end of September and 11.29% at the end of December. MTB has appropriate organizational structure, procedures, and strategies in place for proper and prompt risk management. To comply with the Pillar-II norms (Supervisory Review Process) of Basel III, MTB follows its Board approved policy on the Internal Capital Adequacy Assessment Process(ICAAP), which covers identification and measurement of risks other than the risks under pillar I (Credit Risk, Market Risk and Operational Risk). 2.27 MTB Risk Management Practice as per Six Core Risk Areas: MTB conducts its operations by ensuring compliance with the Core Risk Management Guidelines which covers the following risks: Credit risk, Asset Liability risk, Foreign exchange risk, Internal Control and Compliance risk, Money laundering risk and Information and Communication Technology risk. 2.27.1 Credit Risk Management: The instruments and tools, through which MTB manages credit risks, are Exposure ceilings, Review/renewal, Risk rating model, Risk based scientific pricing, Portfolio management and Credit audit/Loan review mechanism. 184.108.40.206 Credit Policies and Credit Administration: MTB’s credit functions are conducted in a compliant manner under strict, judicious and rational credit policies and principles in conformity with Credit 31
Risk Management (CRM)guidelines of Bangladesh Bank. MTB’s credit disbursement and administration functions are strictly handled by the Credit Administration Department (CAD). MTB Credit Monitoring Department
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- Fall '19
- Management, Mutual Trust Bank Limited