Annual Report - Bank of Baroda

setting the Bank’s aggregate Risk Appetite. In its functions,
it is supported by the Sub Committee of the Board for ALM
and Risk Management which, in turn, is supported by the
Credit Policy Committee (CPC), Asset Liability Management
Committee (ALCO), and Operational Risk Management
Committee (ORMC).
The Asset Liability Management Committee (ALCO) meets
periodically to discuss the product pricing for deposits and
advances, maturity profiles of asset and liabilities, the interest
rate view of the Bank, funding policy, transfer pricing policy
and balance sheet management policy in accordance with the
guidelines issued by the RBI.
The Credit Policy Committee (CPC) has a role to formulate
and implement various credit risk management strategies
including Loan Policy and Off Balance Sheet Exposure Policy
and monitor the Bank’s risk management functions on a regular
basis.
The Operational Risk Management Committee (ORMC)
is an executive committee formed with the prime objective of
mitigation of Operational Risk within the institution by creation
and maintenance of an explicit operational risk management
process.
Risk Management Policy
Risk Management Policy of the Bank provides a summary of
Bank’s principles regarding risk taking and risk management.
The principles are based on the best practices and designs
to avoid conflict of interests. The Bank has developed an
elaborate risk strategy in terms of policy guidelines, for
managing and monitoring various risks. In order to provide ready
reference and guidance to various functionaries dealing with
risk management function in the Bank, the Bank has in place
Asset Liability Management and Group Risk Policy, Domestic
Loan Policy, Mid Office Policy, Off Balance Sheet Exposure
Policy (domestic), Business Continuity Planning Policy, Pillar
III Disclosure Policy, Operational Risk Management Policy
and Internal Capital Adequacy Assessment Process (ICAAP),
Collateral Management and Credit Risk Mitigation and Stress
Test Policy duly approved by the Board.
Risk Management – Implementation and Monitoring
System
In the commercial banking field, the primary risk exposures that
the Bank faces are Liquidity Risk, Credit Risk, Market Risk and
Operational Risk.
Liquidity Risk
The main aim of the Bank’s liquidity management is to
maintain sufficient liquidity (along with an adequate access to
liquid funds at reasonable cost) to meet all its obligations and
commitments as they fall due and also to carry out its normal
banking operations. The overall responsibility for measuring
and monitoring liquidity risk for the Bank rests with the Asset
Liability Management Committee (ALCO). The Bank manages
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