Credit & Investment Committee Charter
Purpose
- Establish policies, limits and guidelines within which credit and investment strategies are to be executed (within limits set by Board)
- Approve or recommend individual or group credits and investments within the authorities delegated from the Board
Authority
- Credit and Investment Committee is primarily a decision making body for executing the Credit and Investment decision of the Bank within the authorities delegated from the Board
- All decisions are to be taken by a simple majority vote. The casting vote in the event of a tie will be that of the Chairman of the Committee.
Composition
- The Composition of the Credit and Investment Committee will be determined by the CEO and will include representatives of the relevant divisions
- Other members of the management can be invited on a case by case basis, however, they will not constitute a part of Credit and Investment Committee
Meetings
- The Committee shall meet monthly or as required for individual credit approval.
- The Committee shall meet in person or telephonically, or by circulation of documents.
- Majority of the members must be present in order for a quorum to be achieved at the meeting.
- Meeting will be held after the monthly results are available for review
Responsibilities: The Committee shall be responsible for:
- Establishing policies, limits and guidelines within which credit and investment strategies are to be executed (within limits set by Board) in order to:
- Ensure implementation of policies and procedures for the extension of credit and investments that will produce reasonable returns at acceptable levels of risk and are in line with "best practice"
- Ensure the portfolio does not exceed acceptable levels of risk
- Ensure that returns from the extension of credit and investments are sufficient to cover the risk assumed
- Ensure that credit authority is granted in a way that balances credit control and levels of customer service
- Ensure that investments are made in line with the Bank´s investment philosophy
- Ensure that credit and investment authority is granted only to qualified people
- Ensure problem loans and bad debts are dealt with expeditiously to minimize credit loss and maximize recoveries
- Review AB´s portfolio trends - growth, target market composition, risk quality rating, and tenor and, when necessary, direct actions and adjust targets when risk is becoming unacceptable and make revisions to:
- Target Market definitions
- Target Market composition goals
- Risk Acceptance Criteria
- Loan Quality Rating system
- Portfolio Quality goals
- Establish pricing policies that are risk based
- Establish procedures for the approval of exception pricing of credits
- Establish credit authority range guidelines that concentrates sufficient control over the portfolio at senior levels
- Review credit authorities and their impact on customer service and AB workloads; make recommendations for adjustments if needed
- Establish credit authority range guidelines for each job in the bank
- Establish minimum qualifications required for individuals to be granted each level of credit authority
- Receive recommendations for individual credit authority evaluate, and grant individual additional or reduce authority where warranted
- Establish investment guidelines and monitor these investments made within these guidelines on an ongoing basis
- Establish criteria and formula for provisions for bad debt (or investments) and for writing off bad debt (or investments)
- Establish criteria for transferring bad debt to recovery agencies
- Receive and approve recommendations for loan write-offs within delegated limits
- Review recovery performance for problem loans and adjust procedures as needed
