Standing Committees of the Board of Directors: The Board of Directors directly contributes to the bank’s operations by electing and appointing the chief officers of the bank. But the directors indirectly participate in the bank management by assisting the higher officers of the bank through the standing committee for carrying out special tasks. Managers are often busy with other businesses and cannot devote much time to the bank. So many times, in bank management, it is possible to make relatively accurate decisions if experienced people sit together and make decisions.
The idea that the decision of the committee will be more accurate than the decision of a single officer can be said from a proverb in English language, Two heads are better than one, that is, if one person makes a decision, the probability of making a mistake is less than if two people make a decision together. However, decisions by committee are rarely taken which can be made quickly by one person. The committee system cannot be said to be entirely flawed. But it is definitely more democratic than arbitrary decisions taken by one person and it is through this committee that the directors participate in the management of the bank.
Often, several standing committees are formed to review and take decisions on similar issues. But sometimes one-time committees are formed for matters that do not usually have to be decided. A one-time committee usually dissolves after reviewing the particular matter and taking a decision. But standing committees are not abolished immediately as they have to review the same new issues.
Standing Committees of the Board of Directors
Members of the Committee:
There is no binding rule regarding the number of members of the committee. The Board of Directors decides the number of committee names and members at the board meeting. It cannot be said that the number of committee members will be equal. However, the members are made members in a large number of committees by rotation. Sometimes functional experts or experienced officers are taken as full committee members or observers. It is possible to be relatively accurate in light of the special knowledge or experience of these non-director rap members.
Types of Standing Committees:
Depending on the size of the bank or on the basis of the number of directors or considering the complexity of decision-making, the number of standing committees may be more or less. Following are the names of the most commonly used standing committees of a medium sized commercial bank.
- Executive Committee
- Loan Committee
- Investment Committee
- Salary and Employee Relations Committee
- Examining Committee and Audit Committee
- Management Evaluation Committee
- Trust Committee
- Discount Committee
- Business Development Committee
1. Executive Committee:
The ERP Committee is empowered by the Company’s By Laws. The executive committee takes decisions on behalf of the board. After one council meeting, before calling another council meeting, this committee takes decisions on behalf of the parish on urgent matters. Decisions made by the Executive Committee have to be approved at the next Board meeting. Note that the Executive Committee does not have jurisdiction to change the declaration of dividend, transmission rules or any other rules, or any other comprehensive law.
2. Loan Committee:
The loan committee may decide on the loan by considering a certain level of loan application on behalf of the borrower. While considering the application, the instructions of the loan policy adopted by the bank should be adopted. Review loan applications above the specified level and send them to the panel for decision with recommendations.
For example, it can be said that loan applications of more than five lakh rupees and less than one crore rupees can be reviewed by the loan committee and take a decision, but before the implementation of the recommendation decision, approval must be obtained in the next board meeting. On the other hand, loan applications of more than one crore rupees are reviewed and sent to the Board meeting for decision with specific comments.
3. Investment Committee:
This committee considers the investment proposals in view of the adopted investment policy (Investme Policy). Investment Portfolio (Investment Portfolio) Investment Maturity Period, Investment Amount, etc. up to a certain number, this committee can take final decision and send it for implementation. Like the loan committee, this committee also reviews investment proposals above a certain number and sends them to the board of directors for final decision with specific comments.
4. Salary and Employee Relation Committee:
Competition between privately owned banks and other financial institutions in a market economy is evident. Every such organization is keen to recruit more qualified, skilled and experienced senior officers to overcome the intense competition. Therefore, this committee reviews the salary allowances provided by the competing institutions along with the facilities of their banks and recommends a proportional increase to attract senior officers to their banks.
In order to maintain good relations among the general staff of various banks, after reviewing the grievances and demands raised by them, the recommendations for appropriate action are forwarded to the Board of Directors. The committee contributes to keeping officer turnover to a minimum level by improving bank employee relations.
5. Examining and Audit Committee:
This committee works to check whether the examination authorities are performing their duties as per the state guidelines and rules. It is the responsibility and duty of this committee to check the activities of any branch or department of the bank and identify the errors and deviations. App review is done from time to time by the committee members themselves or by outside professional experts (CA & CPA) persons. Although such checking is only the job of the bank regulating authority but every department or branch is always more careful in performing the functions under their purview as the bank checks the activities through the self-initiated committee.
As a result, fraud, fraud and intentional and unintentional mistakes by bank officials are very less organized. As a result, the overall efficiency and operational success of the bank increases to a large extent and the directives and regulations of the state financial institution authorities are less violated. At the same time, the reputation of the bank among the public in the country increased.
6. Management Evaluation Committee:
This committee itself or an external management consultancy firm (Management Consultancy firm) evaluates the bank’s management system, staff management property, management and information flow, management including credit procedures and investment procedures and takes recommendations for further improvement from time to time for implementation subject to the approval of the board. sends
7. Trust Committee:
The Trust Committee examines the maintenance of accounts and examines the status of fund investment and income from such accounts. This committee, in particular, identifies the fund’s investment sectors that are capable of achieving higher returns but with lower risk and sends them for implementation subject to the approval of the board.
8. Discount Committee:
Discount Committee is the busiest committee of a commercial bank. The committee takes rational decisions to increase or decrease the flow of credit to various sectors based on the butter rate of the bill presented, the interest rate on the loan payable and the demand and supply of funds, which is implemented subject to the approval of the board.
9. Business Development Committee:
Business development committees can be of two types. First: Testing or researching new innovative services or projects of the bank. Secondly, to create demand among the customers about the existing and planned services of the bank. Demand generation is essentially a marketing strategy whose proper and widespread promotion depends on the right advertising medium and the right advertising language. So the first such committee may have bank service experts capable of innovating new bank services. On the other hand, the second committee must have advertising and public relations experts. Irrespective of the composition of the committee, the approval of the committee should be sought prior to its implementation.