Risk Management
RISK MANAGEMENT GUIDELINES BY BANGLADESH BANK maintained by SIBL
INDUSTRY BEST PRACTICES AS SUGGESTD BY BBK
POLICY GUIDELINES
This section details fundamental credit risk management policies that are recommended for adoption by all banks in Bangladesh. The guidelines contained herein outline general principles that are designed to govern the implementation of more detailed lending procedures and risk grading systems within individual banks.
Lending Guidelines
All banks should have established Credit Policies (“Lending Guidelines”) that clearly outline the senior management’s view of business development priorities and the terms and conditions that should be adhered to in order for loans to be approved. The Lending Guidelines should be updated at least annually to reflect changes in the economic outlook and the evolution of the bank’s loan portfolio, and be distributed to all lending/marketing officers. The Lending Guidelines should be approved by the Managing Director/CEO & Board of Directors of the bank based on the endorsement of the bank’s Head of Credit Risk Management and the Head of Corporate/Commercial Banking. (Section 2.1 of these guidelines refers) Any departure or deviation from the Lending Guidelines should be explicitly identified in credit applications and a justification for approval provided. The Lending Guidelines should provide the key foundations for account officers/relationship managers (RM) to formulate their recommendations for approval, and should include the following:
Discouraged Business Types: Banks should outline industries or lending activities that are discouraged. As a minimum, the following should be discouraged:
a.a) Military Equipment/Weapons Finance
a.b) Highly Leveraged Transactions
a.c) Finance of Speculative Investments
a.d) Logging, Mineral Extraction/Mining, or other activity that is
a.e) Ethically or Environmentally Sensitive
a.f) Lending to companies listed on CIB black list or known
INDUSTRY BEST PRACTICES AS SUGGESTD BY BBK
POLICY GUIDELINES
This section details fundamental credit risk management policies that are recommended for adoption by all banks in Bangladesh. The guidelines contained herein outline general principles that are designed to govern the implementation of more detailed lending procedures and risk grading systems within individual banks.
Lending Guidelines
All banks should have established Credit Policies (“Lending Guidelines”) that clearly outline the senior management’s view of business development priorities and the terms and conditions that should be adhered to in order for loans to be approved. The Lending Guidelines should be updated at least annually to reflect changes in the economic outlook and the evolution of the bank’s loan portfolio, and be distributed to all lending/marketing officers. The Lending Guidelines should be approved by the Managing Director/CEO & Board of Directors of the bank based on the endorsement of the bank’s Head of Credit Risk Management and the Head of Corporate/Commercial Banking. (Section 2.1 of these guidelines refers) Any departure or deviation from the Lending Guidelines should be explicitly identified in credit applications and a justification for approval provided. The Lending Guidelines should provide the key foundations for account officers/relationship managers (RM) to formulate their recommendations for approval, and should include the following:
Discouraged Business Types: Banks should outline industries or lending activities that are discouraged. As a minimum, the following should be discouraged:
a.a) Military Equipment/Weapons Finance
a.b) Highly Leveraged Transactions
a.c) Finance of Speculative Investments
a.d) Logging, Mineral Extraction/Mining, or other activity that is
a.e) Ethically or Environmentally Sensitive
a.f) Lending to companies listed on CIB black list or known