Composition of the Committee

During the year under review, the Board Audit Committee (the BAC) comprised of the following members. Profiles of the members as at December 31, 2021 are given on pages 106 to 109.

Board members and attendance
Mr R Senanayake* (Chairman)	08/08
Mr K Dharmasiri* (Member)	08/08
Ms N T M S Cooray* (Member)	08/08
Ms J Lee* (Member)	08/08
Mrs D L T S Wijewardena* (Member) (Appointed to BAC w.e.f March 31, 2021)	08/08
Regular attendees by invitation
Mr S Renganathan (Managing Director/Group Chief Executive Officer)	07/08
Mr S C U Manatunge (Director/Chief Operating Officer)	08/08
Mr K D N Buddhipala (Group Chief Financial Officer)
Mr S K Hettihamu (Group Chief Risk Officer)
Mr J Premanath (Group Chief Internal Auditor)
Ms A V P K T Amarasinghe (Group Chief Compliance Officer)
Mr R Mihular (Senior practicing Chartered Accountant, appointed as an Independent Consultant to the Committee to provide necessary assistance in discharging its functions)
Secretary to the Committee Mr J Premanath (Group Chief Internal Auditor)
*Independent Non-Executive Director

Charter of the Committee

The Board approved Charter of the BAC (the Committee) clearly defines the Terms of Reference of the Committee. It is annually reviewed to ensure that new developments relating to the Committee’s functions are addressed. The Charter of the Committee was last reviewed and approved by the Board on October 27, 2021.

The Committee assists the Board in discharging its responsibilities and exercises oversight over financial reporting, internal controls and internal/external audits. The Committee has full access to information, cooperation from Management and discretion to invite any Director or Executive Officer to attend its meetings.

The Banking Act Direction No. 11 of 2007 on “Corporate Governance for Licensed Commercial Banks in Sri Lanka” and its subsequent amendments (hereinafter referred to as the Direction), “Rules on Corporate Governance under Listing Rules of the Colombo Stock Exchange”, and the “Code of Best Practice on Corporate Governance”, issued by The Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) further regulate the composition, role and functions of the Committee.

The Committee is empowered by the Board to:

• Ensure that financial reporting systems in place are effective and well managed in order to provide accurate, appropriate and timely information to the Board, Regulatory Authorities, the Management and other stakeholders.
• Review the appropriateness of accounting policies and ensure adherence to statutory and regulatory compliance requirements and applicable accounting standards.
• Ensure that the Bank adopts and adheres to high standards of corporate governance practices, conforming to the highest ethical standards and good industry practices in the best interest of all stakeholders.
• Evaluate the adequacy, efficiency, and effectiveness of risk management measures, internal controls and governance processes in place to avoid, mitigate, or transfer current and evolving risks.
• Monitor all aspects of internal/external audit and inspection programme of the Bank and review Internal and External Audit Reports for follow up with the Management on responses to their findings and recommendations.
• Review the Interim and Annual Financial Statements of the Bank in order to monitor the integrity of such Statements prepared for disclosure, prior to submission to the Board.

Activities in 2021

The Committee held eight (08) meetings during the financial year ended December 31, 2021. Proceedings of these meetings with adequate details of matters discussed were regularly reported to the Board.

Representatives of the Bank’s External Auditors, Messrs Ernst & Young too participated in all eight (08) meetings during the year by invitation. The Committee also invited members of the Senior Management of the Bank to participate in the meetings from time to time on an as needed basis.

Reporting of financial position and performance:

The Committee assisted the Board in its oversight on the preparation of Financial Statements to evidence a true and fair view on financial position and performance. This process is based on the Bank’s accounting records and in accordance with the stipulated requirements of the Sri Lanka Accounting Standards. In fulfilling its oversight responsibilities, the Committee reviewed and discussed the Interim and Annual Financial Statements for the Bank and the Group, including the acceptability of the accounting principles and the reasonableness of significant estimates and judgements.

The Committee reviewed the Tax Assessments outstanding and action initiated for follow up for resolution through regular reports submitted by the Group Chief Financial Officer.

The prevailing internal controls, systems and procedures were assessed by the Committee and it expressed the view that adequate controls and procedures were in place to provide reasonable assurance to the effect that the Bank’s assets are safeguarded and the financial position of the Bank is well monitored and accurately reported.

Annual review of the policy on adoption of Sri Lanka Accounting Standards SLFRS 9

The Committee reviewed the revised policy document on Adoption of the Sri Lanka Accounting Standard SLFRS 9 on Financial Instruments during the year 2021 and made recommendations for implementation.

The Committee also followed up and monitored the progress of the implementation of IT Systems and automation of the processes for the preparation of Financial Statements as per the Sri Lanka Accounting Standards and Regulatory Requirements.

Internal Capital Adequacy Assessment Process (ICAAP):

The Committee reviewed the effectiveness of internal control mechanism in place to meet the regulatory requirements on ICAAP and the mechanism in place to ensure integrity, accuracy, and reasonableness in capital assessment process of the Bank for the year 2020, as per the Section 10 (in Pillar II – Supervisory Review Process) of the Banking Act Direction No. 01 of 2016 on “Regulatory Framework on Supervisory Review Process”.

Oversight on regulatory compliance:

The Committee also ensured that the Bank complies with all regulatory and legal requirements and closely scrutinized compliance with mandatory banking and other statutory requirements and the systems and procedures that are in place. The quarterly reports submitted by the Group Compliance Officer were used by the Committee to monitor compliance with all such legal and statutory requirements. The Bank’s Inspection Department has been mandated to conduct independent test checks covering all regulatory compliance requirements, as a further monitoring measure.

The Committee monitored the progress on implementation of the recommendations made in the Statutory Examination Reports of the Central Bank of Sri Lanka (CBSL) through regular follow-up reports tabled during the year 2021.

Identification of risks and control measures:

The Bank has adopted a risk-based audit approach towards assessing the effectiveness of the internal control procedures in place to identify and manage all significant risks and that these are being reviewed by the Committee. During the year, special emphasis was given to enhance the scope of internal audit work to cover testing of controls over granting debt moratoriums, relief measures and recoveries.

The Committee sought and obtained the required assurances from Business Units on the remedial action in respect of the identified risks to maintain the effectiveness of internal control procedures.

Internal audit and inspection:

The Committee ensured that the internal audit function is independent of the activities it audited and that it was performed with impartiality, proficiency, and due professional care.

The Committee approved the Programme of Inspection/IS Audit for the year 2021 formulated by the Inspection Department and the Information Systems Audit Unit (ISAU). The progress and scope of Inspections/IS Audits were continuously reviewed to ensure that appropriate corrective actions have been taken to manage risks identified during lockdowns, and curtailed business operations during the Covid-19 pandemic. The scope of work was enhanced/realigned to include credit audits and remote, work from home business operations through online and off-site audit procedures.

The Bank’s Inspection Department carried out, onsite, offsite and online inspection of Business Units including four (4) subsidiaries in Sri Lanka and operations in Bangladesh. Overseas subsidiaries namely Commercial Bank of Maldives Private Limited, CBC Myanmar Microfinance Co. Ltd. and Commex Sri Lanka S. R. L., a subsidiary incorporated in Italy were monitored through an off-site surveillance. With the concurrence of the Board, the Bank continued to engage the services of four (4) firms of Chartered Accountants approved by the CBSL in order to supplement the Bank’s Inspection Department in carrying out inspection assignments.

Five hundred and thirty-seven (537) inspection reports on Business Units including subsidiaries and overseas operations received the attention of the Committee which highlighted the operational deficiencies, risks, and the recommendations. The Committee evaluated the Bank’s system of internal controls and duly reported its findings to the Board.

Major findings of internal investigations with recommendations of the Management were considered and appropriate instructions issued. The Committee also invited representatives from the audit firms assisting in inspections to make presentations on their observations and findings.

ISAU conducted on-site/off-site audits (Bank and Group) covering local and overseas operations. Audits conducted through system-based audit tools, reviews of systems change management activities under the agile approach and verification of compliance with industry standards such as ISO 27001:2013/ PCI-DSS/ Baseline Security Standards (BSS) to ensure safeguarding of IT assets of the Bank.

The Committee paid attention to significant findings and recommendations related to IT Governance, Cyber Security, Network Security, Physical and Logical Access Management, Endpoint Security, Privileged and Vendor Access Management, Robotic Process Automation, Vulnerability Assessment and Penetration Testing Process made in the reports submitted by the ISAU. The Committee also reviewed the reports on findings relating to business continuity planning and disaster recovery arrangements during the year 2021.

Reviewed the Internal Audit report on the independent assessment of the degree of compliance with the Banking Act Direction No. 11 of 2007 issued by the CBSL on Corporate Governance and Code of Best Practice on Corporate Governance issued by the CA Sri Lanka. Reviewed the adequacy and integrity of the Bank’s Management Information System (MIS) through internal audit reports to ascertain whether information presented to the Board is “fit for purpose”.

External audit:

The Committee played the following role with regard to the external audit function of the Bank:

• Assisting the Board in engaging External Auditors for audit services, in compliance with the provisions of the Direction and agreeing on their remuneration with the approval of the shareholders.
• Monitoring and evaluating the independence, objectivity, and effectiveness of the External Auditor.
• Reviewing non-audit services provided by the Auditors, with a view to ensuring that such functions do not fall within the restricted services and provision of such services will not impair the External Auditor’s independence and objectivity.
• Discussing the audit plan, scope and the methodology proposed to be adopted in conducting the audit with the Auditors, prior to commencement of the annual audit.
• Discussing all relevant matters arising from the interim and final audits, and any matters the Auditor may wish to discuss, including matters that may need to be discussed in the absence of Key Management Personnel.
• Reviewing the External Auditor’s Management Letter and the Management responses thereto.

The Auditors were provided with the opportunity of meeting Non-Executive Directors separately, without any Executive Directors being present, to ensure that the Auditors had the opportunity to discuss and express their opinions openly on any matter. It provided the assurance to the Committee that the Management has provided all information and explanations requested by the Auditors and also that the Management has not imposed any restrictions on their scope of work.

At the conclusion of the audit, the Committee also met the Auditors to review the Auditor’s Management Letter before it was submitted to the Board and the CBSL.

The members of the Committee evaluated the Bank’s External Auditor, Messrs Ernst & Young covering key areas such as scope and delivery of audit, resources and quality assurance initiatives, during the year 2021.

Mechanism of internal controls:

Sections 3 (8) (ii) (b) and (c) of the Banking Act Direction No. 11 of 2007 stipulate the requirements to be complied with by the Bank to ensure reliability of the financial reporting system in place at the Bank.

The Committee is assisted by the External Auditor and the Inspection Department to closely monitor the procedures designed to maintain an effective internal control mechanism to provide reasonable assurance that this requirement is being complied with.

In addition, the Committee regularly monitored all exceptional items charged to the Income Statement, long outstanding items in the Bank’s chart of accounts, credit quality, risk management procedures and adherence to classification of non-performing loans and provisioning requirements specified by the CBSL. The Committee also reviewed the credit monitoring and follow-up procedures and the internal control procedures in place to ensure that necessary controls and mitigating measures are available in respect of newly identified risks.

Conduct, ethics and good governance:

The Committee continuously emphasized on upholding ethical values of the staff members. In this regard, the Bank has a Code of Ethics, a Whistleblower’s Charter and an Anti-Bribery and Anti-Corruption Policy in place which ensure and encourage all staff members to be ethical, transparent and accountable and resort to whistleblowing if they suspect any wrongdoings or other improprieties. Highest standards of corporate governance and adherence to the Bank’s Code of Ethics were ensured. All appropriate procedures were in place to conduct independent investigations into incidents reported through whistleblowing or identified through other means. The Whistleblower’s Charter guarantees the maintenance of strict confidentiality of the identity of the whistleblowers.

Evaluation of the Committee:

An independent evaluation of the effectiveness of the Committee was carried out by the other members of the Board during the year. Considering the overall conduct of the Committee and its contribution on the overall performance of the Bank, the Committee has been rated as highly effective.

R Senanayake
Chairman – Board Audit Committee

February 25, 2022

Composition of the Committee

During the year under review, the Board Integrated Risk Management Committee (the BIRMC) comprised of the following Board members. Profiles of the members as at December 31, 2021, are indicated on pages 106 to 109.

Board members and attendance
Prof A K W Jayawardane* (Chairman)	05/05
Mr S Renganathan (Managing Director/Group Chief Executive Officer)	05/05
Mr K Dharmasiri* (Director)	05/05
Mr L D Niyangoda * (Director)	05/05
Mr T L B Hurulle* (Director)	05/05
Ms J Lee* (Director)	05/05
Mr R Senanayake* (Director)	05/05
Mrs D L T S Wijewardena* (Director) (Appointed to BIRMC w.e.f. March 31, 2021)	03/04
Non Board member
Mr S K K Hettihamu (Group Chief Risk Officer
Regular attendees by invitation
Mr S C U Manatunge (Director/Chief Operating Officer)	05/05
Ms A V P K T Amarasinghe (Group Chief Compliance Officer)
Mr K S A Gamage (Assistant General Manager – Information Technology: Operations)
Secretary to the Committee Mr K D N Buddhipala (Group Chief Financial Officer)
*Independent Non-Executive Director

Charter of the Committee

The BIRMC has been established by the Board of Directors, in compliance with the Section 3(6) of the Direction No. 11 of 2007, on “Corporate Governance for Licensed Commercial Banks in Sri Lanka”, issued by the Monetary Board of the CBSL under powers vested in the Monetary Board, in terms of the Banking Act No. 30 of 1988. The composition and the scope of work of the Committee are in line with the same, as set out in the BIRMC Charter which was reviewed during December 2021, and clearly sets out the membership, authority, duties and responsibilities of the BIRMC as described in the “Risk Governance and Management” Section of this Annual Report on pages 159 to 178.

The BIRMC assists the Board of Directors in fulfilling its responsibilities for overseeing the Bank’s risk management framework and activities, including the review of major risk exposures and the steps taken to monitor and control those exposures pertaining to the myriad of risks faced by the Bank in its business operations. Duties of the BIRMC include determining the adequacy and effectiveness of such measures, and to ensure that the actual overall risk profile of the Bank conforms to the desirable risk profile of the Bank, as defined by the Board. Material risk types within specific risks that the Bank may face due to existing risks or forward looking emerging risks that require action to minimize their impacts in future are given special attention.

All key risks such as Credit, Operational, Market, Liquidity, Information Technology, Strategic, etc. are assessed by the BIRMC regularly through a set of defined risk indicators. The Committee works very closely with the Key Management Personnel and the Board in fulfilling its statutory, fiduciary and regulatory responsibilities for risk management. The risk profile of the Bank is communicated to the Board of Directors periodically through the Risk Assessment report submitted to the Board following each BIRMC meeting.

Activities in 2021

In discharging the above duties and responsibilities vested on the BIRMC, the Committee reviewed significant risks comprising of Strategic, Operational, Credit, Market, Cyber and other Emerging risk categories during the year. The activities carried out by the Committee are given below:

• As was in the year 2020, the main focus area for the year 2021 too was on the deteriorated credit quality level of the industry amidst socio-economic challenges that the country is facing due to the COVID-19 global pandemic situation. Deliberations on sectors affected and the factors that are within the control of the Bank to mitigate the risks were given due cognisance with a view to arresting deterioration of credit quality.
• Latter part of the year, the focus heavily shifted towards analyzing and reviewing the strategies adopted by the Management to cater to the increasing Foreign Currency (FCY) demand amidst the dearth in FCY liquidity in the market as a result of depleting FCY reserves, shift in risk appetite of foreign counterparts when lending to Sri Lankan institutes due to sovereign rating downgrade by rating agencies during the year.
• The business strategy of the Bank was reviewed by the Committee in line with the changes taken place in external economic factors of the country. Amidst the rising interest rates and FCY liquidity shortage in the interbank market, the Committee focused on identification of the priorities of the business strategy to optimize the growth, profitability and asset quality.
• Technological assistance in our journey in the digital space through embracing Data Analytics to facilitate predictive capabilities was identified as a stepping stone. With such backdrop, Early Warning Signals (EWS) system aimed at maintaining the overall credit quality of the lending portfolio was initiated.
• Approval of parameters and limits set by the Management against various categories of risk upon ascertaining that they are in accordance with the relevant laws and regulations as well as the desired policy levels stipulated by the Board of Directors, were given attention in a very dynamic and challenging environment.
• An important decision was taken in the year 2021 to extend the Social and Environmental Management System (SEMS) to cover the entire CBC Group and accordingly, the Social and Environmental (S&E) Policy was structured to cover the entire Group operations. Development and implementation of systematic and tailor made S&E risk assessment and management procedures of Maldives Operations, Myanmar Operations and CBC Finance have taken placed parallel to the Group S&E policy development.
• As a framework for performance measurement, pricing strategy aligned to underlying risk and optimization of capital allocation, Risk Adjusted Return on Capital (RAROC) framework which enables the assessment of economic feasibility of a credit exposure by incorporating the risk and return of a lending transaction was implemented at the Bank.
• Reviewed periodic reports from the Management on the metrics used to measure, monitor and manage risks, including acceptable and appropriate levels of risk exposures. The reviews covered movements from inherent to residual risk levels which indicate the progress in implementing controls and assessing the effectiveness of measures for addressing the sources of risk.
• Improvements were recommended to the Bank’s Risk Management Framework and related policies and procedures as deemed suitable, in consideration of anticipated changes in the economic and business environment, including consideration for emerging risks, legislative or regulatory changes and other factors considered relevant to the Group’s risk profile.
• The Key Risk Indicators (KRIs) designed to monitor the level of specific risks were reviewed regularly, with a view to determining the adequacy of such indicators to serve the intended risk management objectives and took proactive measures to control risk exposures. The actual results computed monthly were reviewed against each risk indicator and prompt corrective actions were recommended to mitigate the effects of specific risks, in case such risks exceeded the prudent thresholds defined by the Board of Directors.
• Reviewed and revised the Terms of Reference of all Management Committees dealing with specific risks or some aspects of risk, such as the Executive Integrated Risk Management Committee, Executive Committee on Monitoring NPLs, Credit Policy Committee, Information Security Council, Asset and Liability Committee, etc. Actions initiated by the Senior Management were monitored periodically to verify the effectiveness of the measures taken by these respective Committees.
• Operational efficiency, disruptions to services that lead to customer inconvenience, extended outage of Bank’s payment platforms, controls available when there is increased uptake in digital solutions were deliberated under new normal business environment that the Bank is facing subsequent to Covid–19 pandemic.
• The annual work plans, related strategies, policies and frameworks of the above Committees were reviewed to ensure that these Committees have a good understanding of their mandates and adequate mechanisms to identify, measure, avoid, mitigate, transfer or manage the risks within the qualitative and quantitative parameters set by the BIRMC.
• Reviewed and approved the Internal Capital Adequacy Assessment Process (ICAAP) results related to Commercial Bank Group entities to ensure that the Group maintains an appropriate level and quality of capital in line with the risks inherent in its activities and projected business performance.
• Unusual and unprecedented changes experienced by the Bank arising out of socio-economic and geo-political factors that had given rise to extreme market movements and their impact on the capital and the Bank’s performance reviewed closely by the BIRMC and mitigatory measures were deliberated to reduce the impact.
• Monitored the effectiveness and the independence of the risk management function within the Bank and ensured the adequacy of resources deployed for this purpose.
• Reviewed the effectiveness of the compliance function to assess the Bank’s compliance with laws, regulations, regulatory guidelines, internal controls and approved policies in all areas of business operations. Increasing regulatory expectations, challenging working conditions and heightened levels of misbehavior of certain customer segments posed challenges during the period under review in this front.
• Initiated appropriate action through the Management against failures of the Risk Owners in order to improve the overall effectiveness of the Risk Management of the Bank.
• The risk profiles of the Subsidiaries of the Bank were monitored through periodic review of KRIs and comprehensive annual risk reviews.
• Reviewed the adequacy of the Business Continuity and Disaster Recovery plans of the Bank, in line with the statutory requirements.
• Findings from the bi-annual Risk Control Self-Assessment (RCSA) exercise were reviewed.

During the year under review, the BIRMC held four (04) meetings on quarterly basis and one (01) additional meeting specifically to discuss the Internal Capital Adequacy Assessment process of the Bank. The proceedings of the Committee meetings were regularly reported to the Board of Directors.

During the year 2021, the BIRMC supported execution of the overall business strategy of the Bank within a set of prudent risk parameters that are reinforced by an effective risk management framework.

Proceedings of the Committee meetings which also included activities under its Charter were regularly reported to the Board of Directors.

Prof A K W Jayawardane
Chairman – Board Integrated Risk Management Committee

February 25, 2022

Composition of the Committee

During the year under review, the Board Nomination Committee (the BNC) comprised of the following members. Profiles of the members as at December 31, 2021, are given on pages 106 to 109.

Board members and attendance
Justice K Sripavan* (Chairman)	09/09
Prof A K W Jayawardane * (Director)	09/09
Ms J Lee* (Director)	09/09
Regular attendees by invitation
Mr S Renganathan (Managing Director/ Group Chief Executive Officer)	08/09
Secretary to the Committee Mr R A P Rajapaksha (Company Secretary)
*Independent Non-Executive Director

Terms of Reference of the Committee

The Board Nomination Committee was established by the Board of Directors in compliance with the Clause 3 (6) (iv) of Banking Act Direction No. 11 of 2007 on “Corporate Governance for Licensed Commercial Banks in Sri Lanka” issued by the Monetary Board of the Central Bank of Sri Lanka (CBSL) under powers vested in the Monetary Board in terms of Section 46 (1) of the Banking Act No. 30 of 1988, as amended. The Committee was established to ensure Board’s oversight and control over selection of Directors, Chief Executive Officer and Key Management Personnel.

The Composition and the scope of work of the Committee are in line with the same as set out in the Terms of Reference.

Charter of the Committee

The Committee shall;

• review the structure, size and composition of the Board and make recommendations to the Board with regard to any change.
• review the leadership needs of the organization, both executive and non-executive with a view to ensure long term sustainability of the organization to compete effectively in the market place.
• implement a procedure for the appointment and re-appointment of Directors to the Board taking into account factors such as fitness, propriety including qualifications, competencies, independence and relevant statutory provisions and regulations.
• implement a procedure for the selection/ appointment of Managing Director/Group Chief Executive Officer, Chief Operating Officer and other Key Management Personnel.
• set the criteria such as qualifications, competencies, experience, independence, conflict of interest and other key attributes required for the eligibility to be considered for the appointment or promotion to the position of Managing Director/Group Chief Executive Officer, Chief Operating Officer and Key Management Personnel.
• prior to any appointment is made by the Board, evaluate the balance of skills, knowledge, experience and diversity on the Board and in the light of this evaluation, prepare a description of the role and capabilities required for a particular appointment.
• consider in respect of the Executive Directors and Key Management Personnel proposal for their appointment or promotion and any proposal for their dismissal or any substantial change in their duties or responsibilities or the terms of their appointment.
• prior to the appointment of a Director ensure that the proposed appointee would disclose any other business interests that may result in a conflict of interest and report any future business interests that could result in a conflict of interest.
• consider and recommend from time to time, the requirements of additional/ new expertise for Directors and other Key Management Personnel.
• propose the maximum number of listed Company Board representations which any Director may hold in accordance with relevant statutory provisions and regulations.
• peruse duly completed Affidavits and Declarations of all Directors and Key Management Personnel and recommend same for approval of the Board.
• formulate plans for succession for Key Management Personnel, Executive and Non-Executive Directors in the Board and in particular for the key roles of Chairman and Group Chief Executive Officer and Chief Operating Officer taking into account challenges and opportunities facing the Company and skills needed in the future.
• make recommendations to the Board concerning, suitable candidates for the role of Senior Independent Director in instances where Chairman is not an Independent Director, membership of other Board Committees as appropriate in consultation with the Chairpersons of those Committees and the re-election of Directors at the Annual General Meeting by the Shareholders or the retirement by rotation according to the provisions of the Articles of Association of the Bank.
• monitor the progress of any relevant Corporate Governance or Regulatory Developments, that may impact the Committee and recommend any actions or changes it considers necessary for Board approval and ensure compliance with existing Laws and regulations.
• be authorized to discuss issues under its purview and report back to the Board with recommendations, enabling the Board to take a final decision on the matter.
• be authorized to express their independent views when making decisions.
• be authorized by the Board to obtain, at the Bank’s expense, outside legal or other professional advice on any matters within its Terms of Reference.
• make recommendations to the Board concerning an indemnity and insurance cover to be taken in respect of all Directors and Key Management Personnel in accordance with the Articles of Association, relevant statutory provisions and regulations.
• invite any member of the Corporate Management, any member of the Bank staff or any external advisers to attend meetings as and when appropriate and necessary.

Activities in 2021

Nine (9) Committee meetings were held during the year under review. The proceedings of the Committee meetings are regularly reported to Board of Directors.

The Committee recommended the election/ re-election of Directors, taking into account the performance and contribution made by them towards the overall discharge of the Board’s responsibilities. The Committee identified suitable persons to fill the vacancies arising in the Board and after carefully evaluating several candidates, recommended the appointment of one (01) new Non Executive/ Independent Director to the Board during the year.

The Committee obtained declarations from all the Directors through a prescribed format confirming their status of independence. Affidavits signed by each of the Directors through a prescribed format was obtained with the assistance of the Company Secretary to satisfy an annual requirement imposed under a Direction issued by the Central Bank of Sri Lanka (CBSL) and the original of same was furnished to the Director of Bank Supervision of CBSL to enable the CBSL to re-assess their fitness and propriety.

The Terms of Reference for BNC was reviewed and recommended for approval by the Board of Directors. The Succession Plan developed to ensure orderly succession of Board appointments was approved by the BNC.

As provided for in the Articles of Association of the Bank, the BNC recommended for approval of the Board retirement by rotation of two Directors. Based on recommendations made by the BNC, the Board approved appointments of two Assistant General Managers, two Deputy General Managers and a Chief Treasury Officer on contract basis to the Corporate Management.

As per the recommendation made by the BNC, the Board also approved the re-designation of seven members of the Corporate Management of the Bank, who carry out Group-wide supervisory responsibilities with officers engaged in subsidiaries/overseas operations of the Bank reporting directly to them.

The Committee continued to work closely with the Board of Directors on matters assigned to the Committee and reported back to the Board of Directors with its recommendations.

Justice K Sripavan
Chairman – Board Nomination Committee

February 25, 2022

Composition of the Committee

During the year under review, the Board Human Resources and Remuneration Committee (the BHRRC) comprised of the following members. Profiles of the members as at December 31, 2021, are indicated on pages 106 to 109.

Board members and attendance
Justice K Sripavan* (Chairman)	04/04
Ms J Lee* (Director)	04/04
Prof A K W Jayawardena* (Director	04/04
Regular attendees by invitation
Mr S Renganathan (Managing Director/ Group Chief Executive Officer) Participated in all deliberations except those matters impacting his own terms and conditions of employment.	04/04
Secretary to the Committee Mr U I S Thilakawardena (Group Chief Human Resource Officer)
*Independent Non-Executive Director

Charter of the Committee

Evaluate, assess, decide and recommend to the Board, matters that may affect the Human Resource Management of the Bank specifically including:

• Determine compensation of the Chairman, Deputy Chairman, Managing Director/ Group Chief Executive Officer and other members of the Board of Directors of the Bank, while ensuring that no Director is involved in setting his or her own remuneration.
• Determine compensation and benefits of the KMP and establish performance parameters in setting their individual goals and targets.
• Formulate guidelines, policies and parameters for the compensation structures for all executive staff of the Bank and oversee its implementation.
• Review information related to executive pay from time to time to ensure same is in par with the market/industry rates or as per the strategy of the Bank.
• Evaluate the performance of Managing Director and KMP against the pre-agreed targets and goals.
• Make recommendations to Board of additional/new expertise required by
  the Bank.
• Assess and recommend to the Board, promotions of KMP, address succession planning and issues relating to organizational structure.
• Evaluate, assess and make recommendations and provide directions pertaining to the Board of Trustees and the management of the Private Provident Fund of the Bank.
• Ensure that all regulatory and contractual commitments relating to employees are fulfilled in a timely manner.
• Recommend/decide/give directions on disciplinary matters resulting in a significant financial loss to the Bank, caused by KMP of the Bank.
• Formulating formal and transparent procedures for developing policy on remuneration for Executives and Directors.
• Approving annual increments, bonuses, changes in perquisites and incentives.

The Chairman of the Committee can convene a special meeting in the event a requirement arises provided all members are given sufficient notice of such special meeting. The quorum for a meeting is two (2) members. Members of the Corporate Management may be invited to participate at the sittings of the Committee meetings as and when required by the Chairman, considering the topics for deliberation at such meeting. The proceedings of the Committee meetings are regularly reported to the Board of Directors.

Guiding Principles

The overall focus of the Committee:

• Setting guidelines and policies to formulate compensation packages, which are attractive, motivating and capable of retaining qualified and experienced employees in the Bank. In this regard, the Committee sets the criteria such as qualifications, experience and the skills and competencies required, to be considered for appointment or promotion to the post of Managing Director/Group Chief Executive Officer and to Key Management Positions.
• Setting guidelines and policies to ensure that the Bank upholds and adheres to the provisions of the Laws of the Lands particularly those provisions of the Banking Act No. 30 of 1988, including the Directions issued by the Monetary Board/Director of Bank Supervision in accordance with the provisions of such Act.
• Providing guidance and policy direction for relevant matters connected to general areas of Human Resources Management of the Bank.
• Ensuring that the performance related element of remuneration is designed and tailored to align employee interests with those of the Bank and its main stakeholders and support sustainable growth.
• Structuring remuneration packages to ensure that a significant portion of the remuneration is linked to performance, to promote a pay for performance culture.
• Promoting a culture of regular performance reviews to enable staff to obtain feedback from their superiors in furtherance of achieving their objectives and development goals.
• Developing a robust pipeline of raising talent capable and available to fill key positions in the Bank.

Methodology adopted by the Committee

The Committee recognizes rewards as one of the key drivers influencing employee behaviour, thereby impacting business results. Therefore, the reward programmes are designed to attract, retain and to motivate employees to perform by linking performance to demonstrable performance-based criteria. In this regard, the Committee evaluates the performance of the Managing Director/Group Chief Executive Officer and KMP against the pre-agreed targets and goals that balance short-term and long-term financial and strategic objectives of the Bank.

The Bank’s variable (bonus) pay plan is determined according to the overall achievements of the Bank and pre-agreed individual targets, which are based on various performance parameters. The level of variable pay is set to ensure that individual rewards reflect the performance of the Bank overall, the particular business unit and individual performance. The Committee makes appropriate adjustments to the bonus pool in the event of over or under achievement against predetermined targets. In this regard, the Committee can seek external independent professional advice on matters falling within its purview.

Further, the Committee may seek external agencies to carry out salary surveys to determine the salaries paid to staff vis-à-vis the market position, enabling the Committee to make informed decisions regarding the salaries in the Bank.

Activities in 2021

The Committee held four (04) meetings during the year under review and the proceedings of the Committee meetings which also included activities under its Terms of Reference were regularly reported to the Board of Directors with its comments and observations.

The Committee determined the bonus payable for 2020 performance according to the Variable Pay Plan (VPP) for Executive staff and the grant of annual increments to the Executive staff who are not covered by the Collective Agreement. Performance of the members of the Corporate Management including that of the Managing Director/Group Chief Executive Officer and the Chief Operating Officer during the financial year 2020 was reviewed. At the conclusion of the review process for 2020, the Key Performance Areas and the respective KPIs of the Corporate Management members set for 2021 were carefully perused by the Committee and agreed on, subject to changes.

Requests by the Pensioners for a revision of pension was considered and granted during the year. The Terms of Reference for the BHRRC was reviewed and recommended for approval by the Board of Directors.

New Policy on Director Perquisites & Remuneration was reviewed and recommended to the Board for approval.

Justice K Sripavan
Chairman – Board Human Resources and Remuneration Committee

February 25, 2022

Composition of the Committee

During the year under review, the Board Related Party Transactions Review Committee (the BRPTRC) comprised of the following Independent Non-Executive Directors (in conformity with the requirements of the Code of Best Practice on Corporate Governance issued by CA Sri Lanka). Profiles of the members as at December 31, 2021, are indicated on pages 106 to 109.

Board members and attendance
Justice K Sripavan* (Chairman)	04/04
Mr L D Niyangoda* (Member)	04/04
Mr T L B Hurulle* (Member)	04/04
Mr R Senanayake* (Member)	04/04
Regular attendees by invitation
Mr S Renganathan (Managing Director/ Group Chief Executive Officer)	04/04
Mr S C U Manatunge (Director/Chief Operating Officer	04/04
Secretary to the Committee Mr L W P Indrajith (Assistant General Manager – Finance)
*Independent Non-Executive Director

Charter of the Committee

Demonstrating the Bank’s commitment to good governance, the Board formed the BRPTRC in 2014 by early adoption of the Code of Best Practice on Related Party Transactions (RPT) as issued by the Securities and Exchange Commission (SEC) of Sri Lanka which became mandatory for all listed entities from January 01, 2016. Being one of the few listed entities to do so, the Committee assists the Board in reviewing all related party transactions carried out by the Bank, all its subsidiaries and the Associate in the Group to ensure that there are no conflicts of interest. The Committee also assists the Board in maintaining transparency in relation to RPT with the required disclosures.

The mandate of the Committee includes inter-alia, the following:

• Developing, updating and recommending for adoption by the Board of Directors of the Bank and its listed subsidiaries, a RPT Policy consistent with that proposed by the SEC.
• Updating the Board of Directors on the RPT of each of the companies of the Group on a quarterly basis.
• Advising the Board of Directors in making immediate market disclosures on applicable RPT as required by Section 9.3.1 of the Listing Rules of the CSE.
• Advising the Board of Directors in making appropriate disclosures on RPT in the Annual Report as required by Section 9.3.2 of the Listing Rules of the CSE.

Methodology Adopted by the Committee

• Reviewing the mechanisms in place to obtain declarations from all Directors (at the time of joining the Board and annually thereafter) informing the Company Secretary, the primary contact point for Directors, of any existing or potential RPT carried out by them or their Close Family Members (CFM) and obtaining further declarations on a quarterly basis in the event of any change during the year to the positions previously disclosed.
• Reviewing the mechanisms in place to obtain confirmations on any new appointments accepted by Directors of the Bank in other entities as KMP, informing the Company Secretary to identify and capture such transactions carried out by the Bank with such entities which need to be disclosed under ‘Directors’ Interest in Contracts with the Bank’ as disclosed on page 158 of this Annual Report.
• Reviewing the mechanisms in place to capture and feed relevant information on RPT which also includes information on KMP, CFM and the Bank’s subsidiaries and associate into the data collection system and the accuracy of such information.
• Obtaining an annual declaration from each Director as required by the CBSL designed to elicit information about any existing or potential RPT.
• Obtaining independent validation from the Bank’s Internal Audit division for information submitted to the Committee for its review.

Further, following types of RPTs are brought to the attention of the BRPTRC.

• Any credit facility or any other form of accommodation for Directors or their CFMs as approved by the Board. In the case of facilities granted to the children of Directors, such transactions require approval of the Board only if the children are financially dependent in terms of the Definition given on “Close relation” in the Section 86 of the Banking Act No. 30 of 1988.
• Any credit facility or any other form of accommodation for entities in which a Director of the Bank holding more than 10% of its paid-up capital as approved by the Board.

Activities in 2021

During the year, as a part of Bank’s annual review of policies, the RPT Policy was further reviewed and updated. The amended RPT Policy was approved by the Board of Directors in November 2021 and implemented. Arrangements were also made to disseminate the amended RPT Policy among all relevant stakeholders and obtain their acknowledgements to ensure that they have read and understood the applicable regulatory requirements relating to identifying, capturing and reporting of RPT. In addition, the Terms of Reference of the Committee was reviewed and revised to capture new developments and was approved by the Board of Directors in November 2021. Further, the Committee took further steps to improve the accuracy of the process involved in submitting the information on RPT.

The Committee held four (4) meetings during the year under review as required by Section 9.2.4 of the Listing Rules of the CSE. The Committee reviewed all RPT carried out during the year at its quarterly meetings and the proceedings of the Committee meetings which also included activities under its Terms of Reference, were regularly reported to the Board of Directors with its comments and observations.

Justice K Sripavan
Chairman – Board Related Party Transactions Review Committee

February 25, 2022

Composition of the Committee

During the year under review, the Board Credit Committee (the BCC) comprised of the following members. Profiles of the members as at December 31, 2021, are indicated on pages 106 to 109.

Board members and attendance
Justice K Sripavan* (Chairman)	12/12
Mr K Dharmasiri* (Director)	12/12
Ms N T M S Cooray * (Director)	09/09
Mr S Renganathan (Managing Director/Group Chief Executive Officer)	10/12
Mr S C U Manatunge (Director/Chief Operating Officer)	12/12
Secretary to the Committee Mr R A P Rajapaksha (Company Secretary)
*Independent Non-Executive Director

Charter of the Committee

The Committee shall assist the Board in effectively fulfilling its responsibilities relating to Credit Direction, Credit Policy and Lending Guidelines of the Bank in order to inculcate healthy lending culture, standards and practices and ensure relevant rules, regulations and directions issued by the appropriate authorities are complied with.

The Committee is empowered to:

• Review and consider changes proposed by the Management from time to time to the Credit Policy and the Lending Guidelines of the Bank.
• Review the credit risk controls in lending, ensure alignment with the market context and the internal policy of the Bank and the prevailing regulatory framework in order to ensure continuous maintenance and enhancement of the overall quality of the Bank's loan book.
• Evaluate, assess and approve credit proposals which fall within the delegated authority level of the Committee as prescribed by the Board from time to time.
• Evaluate, assess and approve the provisioning of bad and doubtful debts, concession on interest and writing off of bad debts within the delegated authority level of the Committee as prescribed by the Board from time to time.
• Review and recommend credit proposals which fall within the purview of the Board
• Evaluate and recommend sector exposures and cross border exposures to the Board as per the frequencies identified in the Risk Management Policy of the Bank.
• Monitor and evaluate special reports called for by the Board.
• Set lending directions based on the
  current economic climate and risk appetite of the Bank.

Activities in 2021

The Committee held Twelve (12) meetings during the year under review. The proceedings of the committee meetings were regularly reported to the Board of Directors.

In a challenging environment due to the COVID-19 pandemic affecting the global and local business environment, the Committee set the lending directions of the Bank for prudent management of credit growth, while aiming at maintaining and improving credit quality.

The Committee approved credit proposals above a predetermined limit, recommended credit proposals and other credit reports intended for approval/perusal by the Board of Directors after careful scrutiny. These tasks were carried out by the Committee in line with the Bank’s lending policies and credit risk appetite to ensure that the lending portfolios were managed in line with the stipulated credit risk parameters set by the Board of Directors while achieving the Bank’s lending targets.

Justice K Sripavan
Chairman – Board Credit Committee

February 25, 2022

Composition of the Committee

During the year under review, the Board Investment Committee (the BIC) comprised of the following members. Profiles of the members as at December 31, 2021, are indicated on pages 106 to 109.

Board members and attendance
Ms J Lee* (Chairperson)	11/11
Mr S Renganathan (Managing Director/Group Chief Executive Officer)	11/11
Mr S C U Manatunge (Director/Chief Operating Officer)	11/11
Mr K Dharmasiri* (Director)	11/11
Ms N T M S Cooray* (Director)	11/11
Mr S Muhseen* (Director) (Appointed to BIC w.e.f. February 15, 2021)	09/10
Regular attendees by invitation
Mr K D N Buddhipala (Group Chief Financial Officer)
Mr K A P Perera (Chief Treasury Officer)
Mr B A H S Preena (Assistant General Manager – Corporate Banking)
Mr S K K Hettihamu (Group Chief Risk Officer)
Secretary to the Committee Mr A Wijesiriwardane (Deputy General Manager-Treasury)
*Independent Non-Executive Director

Charter of the Committee

The Board Investment Committee is responsible for the treasury and investment activities of the Bank. The Committee reviews and approves the policies and operating parameters for treasury and investment activities. It evaluates proposed treasury and investment strategies, reviews significant investment decisions, and oversees the performance of the treasury and investment portfolios. The Committee also initiates discussions and reviews the capital management of the Bank.

Given its oversight on treasury activities, the Committee evaluates the Bank’s overall liquidity management operations, treasury investments and borrowing activities, and capital adequacy. The Bank’s borrowing proposals are evaluated together with the liquidity requirement and suitable recommendations are provided.

To meet the core objectives of the Committee, the investment portfolio performance is closely monitored via regular updates from Treasury and Investment Banking Divisions. Suitable treasury and investment proposals are approved or recommended to the Board of Directors. The Committee also evaluates the impact of possible macroeconomic developments and trends to the profitability, liquidity, balance sheet, and capital through sensitivity and scenario analysis. The Committee also provides expert views and assistance to the Management with regard to the treasury and investment portfolio risks and performance.

Methodology Adopted by the Committee

The Committee meets monthly and reviews progress of strategic and significant investments, the liquidity situation of the bank, the currency exposures of the portfolio, and impact on performance and capital. Evaluation of current market developments and the economic outlook of the markets the bank operates in, are reviewed to evaluate the current portfolio and new investment strategies. The Committee actively reviews the monthly performance of the Treasury and Investment Banking Division, where the interest rate risk, re-pricing risk, liquidity risk, currency risk and other market risks are discussed.

The Committee from time to time would issue instructions to executive officers of the Bank on investment related activities.

Activities in 2021

The Committee assumed a significant role in 2021, as the Bank’s operating economic climate created many new and unique challenges. Strengthening the operational framework in relation to investments, continuous evaluation of the investment portfolios, and assessment of the impact on the Bank’s capital was closely monitored and discussed by the Committee. This resulted in major inputs to direct and manage the Bank’s strategy and operations. Due to the deteriorating economic climate of Sri Lanka, the Committee regularly provided inputs and recommendations to the Board of Directors and the Management of the Bank on capital management, possible market shocks and adverse developments. With the Bangladesh operations of the Bank becoming an increasingly important part of the Bank’s overall balance sheet and FCY funding, the Committee discussed the developments in Bangladesh markets and its impact to the Bank.

Following key decisions can be highlighted.

1. Recommendation of the Tier 2 debt issuance of the Bank to strengthen the capital base.
2. Continuous and active monitoring of the FCY position and exposures of the Bank and the introduction of a FCY exposure reduction plan.
3. Regular and detailed discussion of the Bank’s FCY assets and liabilities management process and exposures with the ALM team and proposed recommendations on strategies and approvals.
4. Recommendation for the medium-term FCY borrowing facility from CDC Group, UK.
5. Recommendation for the medium term borrowing proposal for FCY loan from overseas Development Finance Institution (DFI).
6. Evaluation and approval for the investment limits for Sri Lanka Rupee investment portfolios of the Bank.
7. Recommendation for the new Investment Policy of the Bank and the revised operating guidelines for equity market activities of the Bank.
8. Evaluation, finalization, and approval for the Bank’s proposed overseas expansion activities.

Ms J Lee
Chairperson – Board Investment Committee

February 25, 2022

Composition of the Committee

During the year under review, the Board Technology Committee (the BTC) comprised of the following members. Profiles of the members as at December 31, 2021, are indicated on pages 106 to 109.

Board members and attendance
Prof A K W Jayawardane* (Chairman)	04/05
Mr S Renganathan (Managing Director/Group Chief Executive Officer)	04/05
Mr S C U Manatunge (Director/Chief Operating Officer)	05/05
Mr T L B Hurulle* (Director)	05/05
Mr K Dharmasiri* (Director)	05/05
Mr S Muhseen* (Director) (Appointed to BTC w.e.f. March 30, 2021)	03/04
Mrs D L T S Wijewardena* (Director) (Appointed to BTC w.e.f. March 31, 2021)	04/04
Regular attendees by invitation
Mr L H Munasinghe (Group Chief Marketing Officer)
Mr D B Saparamadu (Consultant)
Mr T P Suraweera (Assistant General Manager – Operations)
Mr V Thotagammana (Assistant General Manager- Information Technology: R&D)
Mr U K P Banduwansa (Head of Retail Products & Digital Channels)
Mr K Mediwake (Chief Executive Officer – CBC Tech Solutions Limited)
Secretary to the Committee Mr K S A Gamage (Assistant General Manager – Information Technology: Operations)
*Independent Non-Executive Director

Charter of the Committee

The primary responsibility of the BTC is to assist the Board in performing its oversight function on all Digital and Technological strategies of the Bank and to evaluate all IT-related procurement proposals and submit its recommendations to the Board.

The Committee has been empowered to:

• Guide the Bank on building Technology and Digital Strategy, reviewing the Digital Road Map, Data Science & Machine learning strategies, Technology, and Information Security Roadmaps
• Ensure that the key technology initiatives and emerging technologies support the Bank’s business objectives
• Oversee risks related to the quality and effectiveness of the Bank’s information security strategies
• Review ROI of key IT initiatives.

Activities in 2021

The Committee held five (5) meetings during 2021, and the proceedings of the Committee meetings were regularly reported to the Board of Directors with its comments and observations. The Committee focused on improving the following areas, which are the key drivers of the Bank towards a digital era while ensuring the robustness of the IT infrastructure of the Bank.

Digital reach and convenience have been identified as critical factors in taking the banking business to the next level by enhancing customer convenience on day-to-day banking services. To cater to this requirement, the Bank has implemented a comprehensive Digital Road Map, and in the year 2021, the Bank was able to implement the following key initiatives to excel in the banking operation.

Completed Projects

• Combank Digital – Introducing new responsive web application and two native mobile applications for Maldives operation enabling access across all devices with enhanced user experience with new features.
• Banking on Social Media (Viber banking) – Seamless banking services through
  social media 24/7 with the assistance of
  an AI Chatbot.
• ePassbook Revamping – Bangladesh/Maldives – The hassle-free way to download and view customers’ account transactions online or offline on Android and Apple smartphones. The application provides an online-real time view of the account transactions with Self-Enrolment and Biometric Authentication. 
• Automation of Lower counter operations of branches – Automate and enhance key processes of lower counter operations. This initiative increases customer experience by minimizing waiting time and streamlining the internal processes.
• Government Payment Platform Integration – Facilitating online payments to Government organizations, including SL Customs, BOI, Sri Lanka Ports Authority, Inland Revenue Department, EPF Board, SLS Institute, Import and Export Control Department connected to LankaPay Online Payment Platform (LPOPP) by transferring money directly from customers’ current or savings accounts.
• Pay with Flash – Enabling e-commerce sites to allow users to checkout and pay using their Flash Digital Bank Account.
• Remittance App Phase II with Remittance Tracker integration – Making a hassle-free way to track remittance status for customers employed overseas in real-time through the online tracking system.
• Customer relationship management system – Providing a customer 3600 view dashboard to the branches about a customer to improve customer relationships and identify opportunities for cross-selling and up-selling by providing customized service by analyzing the customer behaviour.

Furthermore, the Agile way of working at IT R&D has supported to cater to the business units with the correct priorities. The productivity and quality of deliveries have been greatly improved compared to the previous year.

Digital Infrastructure plays a vital role in providing an uninterrupted service and serves the ever-increasing customer expectations. Cognisant of the importance of the infrastructure, the Information Technology Department has identified and taken the following key initiatives to enhance the internal system capabilities and streamline the hardware usage;

• 900 Touchpoints (ATM/CRM) – The Bank has further expanded ATM/CRM facility while reaching 900 touchpoints landmark at the end of the Year 2021 while being the Sri Lanka’s largest single ATM/CRM network owned by a private sector bank with 24 x 7 customer convenience and enhanced features.
• High availability Framework – The availability of IT systems for customers is of paramount importance in today’s competitive banking industry, especially in digital platforms. When maintaining availability, “High Availability” is important for IT systems to continue the business even with unpredictable failures of IT systems. The Bank has enhanced the ‘High Availability’ of its mission-critical systems.
• Server Virtualization and Private Cloud – Centralized Virtual Server Infrastructure at Datacenters facilitates the Bank’s systems and applications and covers 93% of the servers and provides many technical advantages while saving OPEX. The strategic decision has been taken to further enhance the server virtualization platform while enabling a private cloud-ready platform.

Enterprise Architecture focus has been set to align all the banking systems and infrastructure to the industry standards. The Business, Data, Application, and Infrastructure architectures have been considered as the key focus verticals incorporating IT standards with security compliance.

• Compliance and Certifications of PCI-DSS/ISO 20000/ISO 27001 – The Bank was recertified for PCI-DSS and ISO 27001 standard in 2021. These are the de facto standards on the Information security and card industry and demonstrate that IT systems and processes are maintained with these world-renowned certifications. All these compliances build customer confidence in information security practices.
• AI and Data Science practice –
  A dedicated team has been formed to create the data culture within the Bank to promote data-driven decision-making to grow business with predictions with trend analysis by segmenting the customers for
  a better-customized banking experience.

Projects In Progress 

The Bank has initiated several key IT projects during the year, including Core Banking upgrade, Enhancing Online Banking platform for Bangladesh, Early Warning Signals for lending portfolio, AI and Data Science use cases, Robotic process automation for internal operations, Recoveries system implementation, Fraud monitoring system implementation and Employee self-service mobile app.

Prof A K W Jayawardane
Chairman – Board Technology Committee

February 25, 2022

Composition of the Committee

During the year under review, the Board Strategy Development Committee (the BSDC) comprised of the following members. Profiles of the members as at December 31, 2021, are indicated on pages 106 to 109.

Board members and attendance
Justice K Sripavan* (Chairman)	06/06
Prof A K W Jayawardane* (Director)	06/06
Mr S Renganathan (Managing Director/Group Chief Executive Officer)	06/06
Mr K Dharmasiri* (Director)	06/06
Mr L D Niyangoda* (Director)	06/06
Ms N T M S Cooray* (Director)	05/06
Ms J Lee* (Director)	06/06
Mr R Senanayake* (Director)	06/06
Mr S Muhseen* (Director)	05/05
Secretary to the Committee Mr R A P Rajapaksha (Company Secretary)
*Independent Non-Executive Director

Charter of the Committee

The Committee was established to have an overall Bank-wide strategic management oversight.

The Committee is empowered:

• To assist the Board in performing its oversight responsibilities relating to the Bank’s strategy.
• To advise the Management and monitor progress on:– Defining of business strategies geared for the sustainable development of
  the Bank; and – Establishment of processes for planning, implementing, assessing, and adjusting of the business strategy.
• To oversee the Management’s engagement on the strategic perspective, direction, and development of the strategy for the Bank and its business units.
• To oversee the Management’s implementation of the approved strategic plan and the progress against strategic milestones and goals.
• To oversee the Management’s implementation of major business transformation projects and their execution.
• To engage in detailed discussion and provide guidance to the Management on:– Governance, risk appetite, financial and capital planning, liquidity and fund management, control environment and resources required to support the Bank’s strategic objectives. – Divestitures, mergers and acquisition strategies including post transaction performance tracking. – The impact of changes in the competitive environment.

Activities in 2021

The BSDC assisted the Board by evaluating the business strategies and strengthening core competencies of the Bank.

The BSDC met more frequently than the minimum of four (04) meetings as per the Terms of Reference [Six (06) meetings were held in 2021] and was able to offer greater responsiveness in the strategic decision-making process of the Bank.

The BSDC reviewed matters related to capital planning, acquisition, investment opportunities and strategies to provide relief measures to borrowers affected by COVID-19 pandemic in addition to actively engaging in the Government relief scheme. Further, the Committee provided guidance to ensure that adequate impairment cover is maintained while sustaining reasonable financial performance. The BSDC reviewed the Digital Road Map based on a presentation made by the Corporate Management and the strategies for enhancing contribution from the Subsidiaries and overseas operations of the Bank. It also evaluated the feasibility of establishing new overseas operations.

Corporate Plan and strategies planned by the Management were reviewed against the achievement and necessary directions were provided to the Management to achieve the desired results.

Important decisions taken at the Committee meetings which also included activities under its Terms of Reference were regularly reported to the Board of Directors for information/approval.

Justice K Sripavan
Chairman – Board Strategy Development Committee

February 25, 2022