Technical Assistance Consultant’s Report This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design. Project Number: 53307-002 November 2020 Kingdom of Bhutan: Diagnostic Study and Strategy Development for Rural Finance Sector Development Prepared by Pramod Pandeya Thimphu, Bhutan For Ministry of Finance
38
Embed
53307-002: Diagnostic Study and Strategy Development for ...
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Technical Assistance Consultant’s Report
This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design.
Project Number: 53307-002 November 2020
Kingdom of Bhutan: Diagnostic Study and Strategy Development for Rural Finance Sector Development
Prepared by Pramod Pandeya
Thimphu, Bhutan
For Ministry of Finance
2020
Final Report
30 NOVEMBER 2020
PRAMOD PANDEYA
Deliverables as per the Terms of Reference (ToR): Sr. No. Task
Expected Delivery Date
1 Draft report on BDBL’s FY2015–2019 Business Plan Evaluation 30 November 2020
2 New loan appraisal templates 30 November 2020
3 TOR for BDBL’s Deputy Chief Executive Officer 30 November 2020
4 Other required documents which support the Program’s first tranche release 30 November 2020
Progress against Deliverables:
Sr. No.
Task Progress
1 Draft report on BDBL’s FY2015–2019 Business Plan Evaluation
Submitted to the BDB
2 New loan appraisal templates
Credit appraisal templates have been prepared, discussed with the BDB credit team and presented to the BDB management for approval and implementation. Following credit appraisal templates are prepared/or updated (Detailed credit appraisal templates in Annexure I):
a. Agriculture loan b. Consumer loan c. Corporate loan d. Home Loan e. SME Loan f. Group loan (Micro loan): existing template updated
3 TOR for BDBL’s Deputy Chief Executive Officer [Credit] Completed (Annexure II)
4 Other required documents which support the Program’s first tranche release
• The BDB Board of Directors during the 160th Board Meeting has approved the formation of Sub Board committee by strengthening the Board Governance and Risk Committee with an additional board member to oversee the implementation of the BDB Restructuring Plan.
• HRM Committee Meeting convened on 30th October 2020 approved the establishment of Project Implementation Unit (PIU) and the appointment of the following focal persons:
1. Yezer Peldon as the Project Manager for the PIU and focal
person for the group loans 2. Phuntsho Choden as the Environment and Social Safeguard
Officer 3. Tshering Choden as the Gender focal person 4. Tshering Dukpa as the focal person to report to the Chief
Executive Officer on the implementation of restructuring plan and monitoring the progress
• NPL Resolution Framework submitted to the BDB
Annexure I
Annexure II: Credit Appraisal Formts
BHUTAN DEVELOPMENT BANK LIMITED C O N F I D E N T I A L
CREDIT APPRAISAL FOR AGRI ENTERPRISE LOAN (AGRICULTURE, FISHERIES &
LIVESTOCK)
New Reschedule Enhancement Restructure
1. CLIENT DETAILS
Name of the Customer :
CID no.
Address of the Customer:
Present Address
Permanent Address
Village
Gewog
Dzongkhag
Client Code : (CIF)
Project Location
Internal Credibility Rating (ICR) :
(2) PRESENT REQUEST(s):
A. New Loan
P Activities Requested
Limit
Interest
Rate
Tenure
(Debt)
(Equity)
Total
3) NATURE OF THE BUSINESS:
(4) CORPORATE AND CAPITAL STRUCTURE: (wherever applicable)
S. N. Main Shareholders/Directors Designation Shareholding
1.
2.
Total
(6) BACKGROUND OF COMPANY / PROMETER/:
Background of Company/Business:
d) Registration Details:
e) License no:
f) Name of Company:
Location of Company:
Background of Promoters/ /Partners;
(7) BUSIENSS BEING MANAGED BY :
(8) QUALIFICATION /EXPERIENCE OF THE PERSON MANAGING BUSINESS:
(9) INITIAL CREDIT FACILITY SANCTIONED:
Nature of
Facility/ies Limit Sanction Date Remarks
(10) LOANs/ Guarantees/ Guarantor WITH OTHER BANKS/FINANCIAL INSTITUTIONS (CIB REPORTSOF BORROWER AND JOINT OWNERS
Financial
Institution
Loan Type sanctioned
Amount
Sanction
date
Outstand
ing
Maturit
y date
Past
Performa
nce
Current
status
Existing loans/ Guarantees/ Guarantor of the borrower with BDB :
Activity Account
Number
sanctioned
Amount
Sanction
date
Outstand
ing
Maturit
y date
Past
Performa
nce
Current
status
(11) EXISTING SECURITY/ COLLATERAL OBTAINED
Sl
#
Collateral details Collateral
value
Ownership
details
Financial
Institution
Other Securities:
• Personal Guarantee:
(12) PAST PERFORMANCE OF closed loans(CUSTOMER): ……….. (13) BUSINESS ANALYSIS (wherever APPLICABLE) :
Technical /Production Details : Raw Material : Key Suppliers : Key Buyers : Market for the Product : Sales and Distributions Strategy : Major Competitors :
Conclusion:
(14) SITE VISIT Report (summary)
Project Location
Conducted on :
Comments :
(15) STOCK VERIFICATION (wherever APPLICABLE)
Conducted on :
(16) FEES AND OTHER CHARGES:
(17) SPECIAL COVENANTS/WAIVER IN THE PROPOSAL:
(18) TOTAL EXPOSURE OF THE BORROWER INCLUDING PRESENT PROPOSAL WITH BDB:
Facilities Present limit Present Proposal Total
Limits
Total Outstanding
1.
2.
Total Funded
(19) A. CONCENTRATION RISK (Bank Level):
Sector Name Code % of Total Exposure (As on ………)
%
Remarks:
Exposure Funded Non-Funded
% of Core Capital (year
end)
Remarks:
(20) PROPOSED SECURITY/IES:
25.1 Fixed Assets Security/ies:
Sl.
No Collateral Details Collateral Value
Ownership
Details
Collateral
Ratio
20.2 Insurance:
(21) SECUTITIES REQUIREMENT COMPUTATION:
Total Collateral Requirement :
Total Collateral Provided/Proposed :
Excess/ (Shortfall) :
Comments on shortfall of collateral, if any and recommendations :
(22) BUSINESS GIVEN BY THE CUSTOMER :
A. Account Turnover
Particulars Debit Amount Credit Amount
Account Turnover
B. Earnings (till date): Interest Gross
Commission / Fees
Others
Total :
General Comments on Income from the Customer:
(23) DISBURSEMENT CRITERIA (Facility-wise):
(24) REPAYMENT source AND SCHEDULE:
(25) KEY RISK AND MITIGATION:
Market Risk:
Management Risk and or Business Continuity Risk:
Financial Risk:
Legal Risk:
AML/CFT Risk:
Other Risk:
Risk Mitigation Strategy for Identified Risks
(26) SWOT ANALYSIS :
Strength -
Weakness
Opportunity -
Threats -
(27) CREDITWORTHINESS OF THE BORROWER (FIVE PILLARS ANALYSIS):
Credit Pillars Maximum Score Inferences &
Comments
Score Allocated
Character 30
Capacity 25
Capital 20
Condition 15
Collateral 10
Overall Credibility Rating (Average of above
scores)
(28) RECOMMENDATIONS/COMMENTS:
Recommended/ Approved/ Declined:
Credit Committee: Branch Credit Committee Regional Credit Committee Main Branch
Credit Committee Head Office Credit Committee II Head Office Credit Committee I
Executive Credit Committee Board Credit Committee
Date:
Annexure II: Terms of Reference for Deputy CEO
Position Title: Deputy Chief Executive Officer
Reports to: Chief Executive Officer
Reporting Department / Division: Credit, Banking, ICT, Finance and Treasury, Legal,
Customer Care, Thimphu Main Branch, Regional Office
Position Summary:
The role of the Deputy Chief Executive Officer (CEO) is to support the Chief Executive Officer
• Digitalization of services and delivery channels to reduce operational cost and expand outreach
• Enhancing operational efficiency with optimal uses of available resources and process improvement.
The Deputy CEO will closely work with the CEO with the following responsibilities and also
assume the CEO’s responsibilities in his / her absence.
Primary Responsibilities:
Organization Leadership:
The Deputy CEO will support the CEO to align BDB team around the strategic objectives of
the BDB. The Deputy CEO will:
• Support the CEO to develop strategic plan and implementation
• Support the CEO to manage the BDB as per the plans, programs and policies approved by the board of directors
• Support the CEO to design an appropriate management structure
• Formulate, review and implement department / division / project plans and programs
• Periodic review of the BDB’s performance along with the pre-defined KPIs. Identify the shortfall on the performance and implement corrective measures
• Ensure that strategic and operational plans are implemented accordingly and pre-defined KPIs are achieved
• Ensure that BDB’s adopts clear and consistent management practices to ensure an effective and cohesive management team.
• Lead the implementation of BDB’s institutional strengthening and restructuring plan, monitor the progress and report to the CEO.
• Regularly report the CEO and board of directors on BDB’s overall operations, credit portfolio including portfolio quality and NPL management.
Financial Management and General Administration:
The Deputy CEO will support the CEO in day to day operations of the BDBs. He/ She is also
responsible to implement an appropriate financial management practices and controls to
ensure sound financial management practices and internal controls mechanism in the BDB.
The Deputy CEO will:
• Support the CEO to prepare and implement BDB’s financial goals including the dividend policy to the shareholders as per the BDB’s vision and consistently meet the key performance indicators set by the board of directors
• Support the CEO to improve BDB’s financial performance while meeting the social mandate
• Ensure that BDB’s financial statement are prudently prepared adhering regulatory norms and disclosure requirements
• Ensure that the interest of depositor are secured • Develop and maintain good relationship with stakeholders and business partners to
remain competitive in the market
Credit Process and NPL Management:
The Deputy CEO will support the CEO to improve the credit process and NPL
management. The Deputy CEO will:
• Lead BDB’s effort to improve portfolio quality in line with its objective and regulatory requirement by streamlining credit process, and implementing an effective portfolio monitoring and supervision mechanism
• Train and provide strategic support to BDB’s credit staffs on credit process management including credit appraisal, portfolio monitoring and supervision
• Led BDB’s endeavor on NPL management. Prepare a NPL management strategy and implement it as a top priority.
ICT and Digital Drive:
The Deputy CEO will also support the CEO to improve current ICT infrastructure and led BDB’s digital journey. The Deputy CEO will:
• Prepare and implement well-structured strategy to lead BDB’s digital drive • Ensure that ICT function efficiently and effectively by adopting the latest technology • Introduce innovative and cost effective digital channels to serve current clientele • Introduce innovative and cost effective digital channels to reach the unbanked or
poorly banked rural population. • Use or improve ICT infrastructure to reduce operational cost and improve
operational efficiency Governance, Internal Control, Risk Management and Compliance:
The Deputy CEO will also support the CEO to ensure corporate governance, improve internal
control, risk management and compliance in the BDB. The Deputy CEO will:
• Serve as a Member of the Board Credit Committee
• Serve as the Chairperson of HO Credit Committee 1
• Serve as the Chairperson of HO Loan Recovery Committee
• Serve as a member of the other relevant committees and provide strategic directions for appropriate decision making
• Review and assess existing internal control mechanisms and institute effective measures to address identified gap. Implement internal control framework to prevent frauds and embezzlements
• Ensure that strong risk management, compliance and governance framework are embedded across different functions of the BDB
• Adhere and implement the findings and observations of audits and compliance as a top priority.
• Implement Risk Based Audit system and IS audit in the BDB Business Development and Customer Care:
The Deputy CEO will also support the CEO in business development and formulation of a well
-defined customer care strategy. The Deputy CEO will:
• Support the CEO to streamline existing products and services to enhance strategic competitiveness
• Support the CEO to prepare and implement short term and long term business plan
• Introduce new banking products and services to the rural clientele through efficient delivery channels
• Support the CEO to foster a customer oriented business approach and “customer first policy”
• Identify new business avenues which align with BDB’s strategic plan and mandate
• Institutionalize corporate relationship with key stakeholders including customers, governments, private sectors, international agencies to achieve strategic objective
• Support CEO to improve international banking services Human Resource Management:
The Deputy CEO will also support the CEO to create a conducive working environment in the
BDB. The Deputy CEO will:
• Review the existing recruitment policy, process and procedures. Streamline the recruitment process if necessary to attract the best talents
• Develop proper retention strategy
• Create a culture of “ mentoring the talents” within the BDB for the higher responsibilities
• Ensure that Human Resources Management (HRM) is effectively and efficiently managed including recruitment process and incentives plans
• Position BDB as the “best place to work” in Bhutan Qualification and Work Experience:
• The candidate should hold a minimum of a bachelor’s degree from a recognized college / university.
• At least 15 years of senior executive experience in a banking and finance environment, with a diverse set of experiences associated with the management of financial services products and distribution.
• Extensive cross-functional banking and finance experience including credit management, risk management (credit, operational, balance sheet, reputational etc), asset/liability management, operations, business development and product development.
Desired Skills:
• Highly organized, motivated and self-starter with the proven ability to manage bank operations efficiently and effectively.
• Prior experience in bank restructuring
• Strong skills on credit process management including credit risk management and NPL (distress assets) management
• Strong leadership, management, supervision, and interpersonal skills
• Excellent communication and presentation skills
• Demonstrated ability to work collaboratively with diverse stakeholders including government, regulators and international agencies
• Excellent analytical, problem solving, and evaluation skills.