RELATED PARTY TRANSACTIONS, POLICIES AND PRACTICES
The Bank adheres to the Guideline on Related Party Transactions issued by the Bank of Mauritius in January 2009. In line with this Guideline, the Board of Directors appointed a Conduct Review Committee to review and approve all related party transactions. The Board has also adopted a policy which sets out the rules governing the identification of related parties, the terms and conditions applicable to transactions entered into with them, and reporting procedures to the Conduct Review Committee.
The Conduct Review Committee (‘CRC’) comprises three independent directors and one independent advisor who are not officers and employees of the Bank. This Committee is responsible for the approval of all Category 1 and Category 2 related party transactions, which are not exempted as per Bank of Mauritius guidelines (falling below 2% of Tier 1 capital).
All related party transactions are reviewed at the level of the Conduct Review Committee, which ensures that market terms and conditions are applied to such transactions. Those exceeding the 2% of Tier 1 capital, as and when request is sent for approval and for those exempted transactions i.e. below the 2% of Tier 1 Capital; these are reviewed in the quarterly meetings. Furthermore, all facilities granted to minority shareholders of AfrAsia Bank Limited and exceeding 2% of Tier 1 capital, even not classified as Related Party as per Bank of Mauritius guidelines are reviewed by the CRC on a quarterly basis.
During the normal course of business in the year, the Bank entered into a number of banking transactions with its related parties. These include placements or loans to/from banks, deposits as well as other normal banking transactions. As at 30 June 2014, related party exposure was within regulatory guidelines at 39.6% (Cat 1 and Cat 2). However, the Bank has made a provision of MUR 108m on a facility granted to one of its subsidiaries, which has been considered as impaired.
The Bank has complied in all respects with the Bank of Mauritius Guideline on Related Party Transactions. Related party reporting to the Bank of Mauritius is made on a quarterly basis. Moreover, all related party transactions (including those transactions which are exempted as per the Guideline on Related Party Transactions) are monitored and reported to the Conduct Review Committee on a quarterly basis.