Management Approach to Economic, Social and Environmental Parameters
The Bank’s Approach to Key Sustainability Impacts, Risks and Opportunities
As a leading Sri Lankan financial institution, the country’s most awarded bank and the only Sri Lankan Bank ranked among the top 1,000 banks worldwide for three consecutive years, Commercial Bank is trusted by more than two million customers representing various walks of life and sectors of the economy. We have also become an employer of choice for many Sri Lankans.
Impacts on the Economy
With our robust product portfolio and national network of branches and ATMs, we support Sri Lanka’s economy by providing financial solutions and infrastructure across the country. We also contribute to the country’s development by financing infrastructure projects carried out by the Government, as well as the private sector ventures in all areas of the economy.
Impacts on Society
Through our Personal Banking arm, we provide financial facilities that help self-employed individuals and small- and medium-scale entrepreneurs get ahead. At the same time, our Corporate Banking and Treasury Operations support large corporate entities, which in turn generate much needed employment opportunities. We also encourage female entrepreneurship by offering additional benefits by means of lucrative interest rates and special benefits on fees and commissions.
As a good corporate citizen, Commercial Bank actively contributes to the diverse needs of society through our Corporate Social Responsibility (CSR) Trust. Pioneered in Sri Lanka by Commercial Bank, the Trust focuses primarily on education and in particular on information technology and English literacy. The Bank’s Board of Directors has committed to directing up to 1% of net profit after-tax towards the Trust fund, which is managed separately by a Board of Trustees. Since launching the CSR Trust, the Bank has contributed a total of Rs. 340 Mn., including Rs. 50 Mn. in 2013.
Impacts on the Environment
As the Bank’s core business is providing banking and ancillary financial services, our operations do not have a significant impact on the limited resources of the planet - although we recognise that our customers’ businesses and projects and the operations of our supply chain may have. In our business activities we engage with a wide range of suppliers, including building contractors and owners; providers of assets and supplies such as IT equipment, motor vehicles, furniture and stationery; and providers of utility services such as electricity and telecommunication. We are mindful of minimising impacts on the environment due to our engagement with these stakeholders and have taken many steps to mitigate possible adverse impacts on the environment.
Risks and Opportunities in the Economy
At Commercial Bank we are mindful of our responsibilities as one of Sri Lanka’s leading banks, accounting for approximately 10% of the total assets of the banking and finance industry in Sri Lanka. We have a strong obligation to properly manage the risks we face to ensure the continuity of our own business and the stability of country’s economy.
Commercial Bank also has an important role to play in the wake of a new Sri Lanka after the end of the 30-year civil war. The integration of the Northern and the Eastern regions of the country with the rest of Sri Lanka offers enormous potentials for economic revival. The banking and financial sector plays a crucial role in this sphere, especially in agriculture, tourism, construction and infrastructure development. Of the 65 new branches we have opened in Sri Lanka over the past four years, eight were in the Northern Province and six in the Eastern Province, comprising 21% of the total new branches opened since 2010. In addition, 23 ATMs in the Northern Province and 12 ATMs in the Eastern were installed during the same period. These initiatives have undoubtedly enhanced customer convenience, access to the modern day banking facilities and improved financial literacy.
However, because the two provinces are rebuilding from scratch, we recognise that it could be a long time before they experience a full economic and social recovery. We therefore expect that any business investment in those regions may have a comparatively longer break-even period.
As a responsible financial institution, we recognise our duty to support the ‘Five plus One Hub’ (i.e. development of energy, maritime, knowledge, tourism, commerce and aviation sectors) strategy outlined in the Government’s Road Map for 2014 and beyond. Furthermore, the entire Sri Lankan banking and financial industry will encounter risks and rewards as the Central Bank of Sri Lanka introduces reforms to align individual banks’ interests with the long-term interests of the nation - including the target of growing into a US $ 100 Bn. economy by 2016. The Central Bank’s Master Plan on Consolidation of the Financial Sector includes the following goals:
- Consolidating banks and non-banking financial institutions (NBFIs), leading to a fewer but stronger banks and NBFIs that can better withstand external pressures.
- Encouraging strong regional presence.
- Having a large development bank that provides substantial support to financing activities across the country.
Risks and Opportunities in Terms of Society
The Northern and the Eastern Provinces are predominantly home to Tamil and Muslim communities. By participating in the regions’ economic revival, we will help to increase the range of financial services and career opportunities available to these minority groups, and in turn will strengthen the diversity of Commercial Bank’s customer base and staff.
Risks and Opportunities in Terms of Environment
Commercial Bank finances renewable-energy generation and other similar projects. We are mindful of the possible effects on our operations resulting from our business partners’ varying level of adherence to and non-compliance with environmental laws and regulations.
The Bank’s Board of Directors does not tolerate the introduction of any product or service that could have a negative impact on the triple bottom line of sustainability impacts - economic, social and environmental. The Board encourages promoting of products and services that improve sustainability in all three areas, particularly through the use of modern technology.
Through close dialogue with our stakeholders, we have identified material sustainability issues relevant to their interests and those of the Bank. These insights help us to discern challenges ahead and provide a platform for setting sustainability targets that will help us better manage those challenges while capitalising on any opportunities that come our way. We are confident that the relationships established with our stakeholders and the feedback they provide on material issues will improve our business practices and performance in the coming years.
Commercial Bank’s Corporate Social Responsibility approach focuses on getting the fundamentals right with customers by delivering fair value and quality advice; being a good employer by investing in the skills and capabilities of our staff; and fulfilling our responsibilities to society by supporting communities, managing our environmental impact and having a positive economic effect through our supply chain.
The Board Integrated Risk Management Committee, along with the Bank’s Integrated Risk Management Department, conduct constant monitoring and assist our various business divisions as they work to minimise risks. The Integrated Risk Management Department undertakes regular reviews of each business unit with the objective of identifying risks, including those arising from sustainability issues.
The table below demonstrates our progress over the past year on commitments made in 2012 and also reveals our strategic commitments.
Commitments Made in 2012 |
Progress Made in 2013 |
Future Commitments |
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Economic Commitments - Short Term and Medium Term |
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Achieve targets as set out in the Section on ‘Financial Goals and Achievements’. |
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Achieve targets set out in the Section on ‘Financial Goals and Achievements’. |
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Environmental Commitments - Short Term and Medium Term |
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Apply the Bank’s Social and Environmental Management System (SEMS) for project financing, particularly to enhance lending for renewable energy and energy savings projects. |
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Apply the spirit of the Bank’s SEMS for all loan financing proposals in the short to medium term, particularly with a view to exploring further lending for renewable energy and energy savings projects. |
Priority will be given to procure energy-conserving technologies, with a view to conserving the environment. |
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Achieved - 100%. |
Continue to give priority to procuring energy-conserving technologies. |
Disposing of decommissioned ATMs through a body/bodies authorised by the Central Environmental Authority. |
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There were no disposals during the year. A formal process is in place for this purpose. |
Continue to dispose of decommissioned ATMs to the standards of the Central Environmental Authority. |
Responsible sourcing. |
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All suppliers were screened to ensure that they comply with Bank’s pre-determined screening criteria on environmental and social aspects. |
Strengthening the screening criteria for responsible sourcing. |
Reducing waste. |
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Bank took several measures to reduce waste as explained under Management Approach to Economic, Social and Environmental Parameters. |
Following measures to be taken to reduce use of paper.
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Setting up of a new primary data centre incorporating the latest energy saving features in the first quarter. This is projected to save 900 sq.ft. of space and 300,000 kWh per annum of energy. |
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Environmental Commitments - Medium Term |
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Development of smart buildings that use space and natural lighting more efficiently. |
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The Bank did not build any buildings during the year. |
Continue to explore the possibility of developing smart buildings. |
One national scale programme on preserving environment. |
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Bank funded the cost of a coral replanting project and it is ongoing. |
The project is expected to be completed in 2015. |
Social Commitments - Short Term to Medium Term |
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Continue to focus on talent management, staff relations and welfare policies, productivity enhancement, business partnering, and improved compensation and benefits. |
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Continue measuring employee satisfaction through surveys; improve satisfaction level further in 2014. |
Commit up to 1% of the Bank’s profit after tax to the CSR Trust. |
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The Bank contributed Rs. 50 Mn. in 2013, increasing the total contribution to Rs. 340 Mn. since the formation of the Trust in 2004. |
Commit up to 1% of the Bank’s profit after tax to the CSR Trust. |
The target for 2013 was to complete 100 projects that included in the following: |
The target for 2014 is to complete another 75 projects that will include: |
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Fostering social inclusion by making banking convenient and expanding the subscriber base for our mobile banking system to 100,000 customers. |
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Achieved - 100% |
Fostering social inclusion by making banking convenient and expanding our mobile banking subscriber base to 130,000 customers. |
Two small and medium-scale enterprise development projects. |
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Not achieved due to additional projects undertaken as shown above. |
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New channel development and |
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Not achieved due to other engagements superseding. |
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Branch and ATM network expansion to further enhance accessibility. |
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9 branches and 32 ATMs were added to the Bank’s network |
At least 10 branches and 25 ATMs to be added to the network of delivery points to further enhance accessibility |
Multilingual communications through media, point-of-sale materials, etc., to serve all ethnic groups. |
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Achieved - 80% |
Multilingual communications through media, point-of-sale materials, etc., |
Further expand the internship programme - where only advanced level students are currently included - to include graduates for a period of six months, developing their employability by providing private-sector experience. |
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188 interns were selected and
placed in branches and departments. |
Continue with the Internship programme. |
Our Approach to Economic Sustainability
At Commercial Bank, we continuously strive to repay the trust that shareholders place in us by returning maximum value. In our quest for sustainable growth, we work as well with all other stakeholders - including customers, employees and suppliers - to help achieve their aspirations. As Sri Lanka’s benchmark private sector bank, we conduct business in a transparent and ethical manner, managing risk and pursuing opportunities while adhering to the principles of good governance.
Commercial Bank finances many large infrastructure projects that help fuel the country’s economic engine, creating many trickle-down benefits for society as a whole, as well as for the environment. Indirect economic impacts are equally important to our Bank as we pursue the goals of sustainable performance. In addition, the Bank contributes to its CSR Trust Fund for various community investments.
The Board of Directors guides Commercial Bank’s approach to economic sustainability with a comprehensive corporate plan that reflects the input of all key strategic business units - Corporate Banking, Personal Banking, Treasury and International - as well as the other support service units. The needs of each unit are addressed in the Annual Budget, which is prepared in the context of a rolling five-year plan. Business units’ detailed budgets include specific goals and resources allocated according to the Bank’s overall strategic objectives.
The sections within this report on ‘Corporate Governance’ and ‘Managing Risk at Commercial Bank’, discuss in detail how we have taken advantage of specific opportunities, along with our governance and risk management practices.
Our performance in achieving defined economic targets is detailed in the report sections devoted to ‘Operating and Financial Highlights’, ‘Key Financial Goals and Achievements’ and ‘Performance of the Strategic Business Units’.
We have put in place a number of mechanisms to monitor progress made towards the goals set out in the Corporate Plan and Budget:
- Detailed management accounts which also includes key performance data are submitted to monthly meetings of the Board of Directors and include explanations of material variances. The Bank prepares Interim and Annual Financial Statements according to the requirements of the Sri Lanka Accounting Standards (LKAS/SLFRS), which are based on the International Financial Reporting Standards (IFRS).
- At Board meetings, the heads of the Bank’s main strategic business units discuss recommended action plans to improve performance.
- The Board has set up 7 Sub-Committees - 4 of them mandatory - to support Directors in
their efforts and ensure good governance. These Sub-Committees are in turn backed by several other management committees headed by the Managing Director. - An effective internal audit function covers Commercial Bank’s entire operations in Sri Lanka and Bangladesh.
- Annual external audit of Financial Statements is conducted by a reputable firm of chartered accountants. Other statutory audits are undertaken by regulators such as the Central Bank of Sri Lanka, the Bank of Bangladesh and the Inland Revenue Department.
- A reputable external assurance provider conducts an annual verification of the bank’s sustainability reporting.
A number of annual ratings are provided by Fitch Ratings, RAM Ratings and other rating agencies.
Awards, accolades and other commendations have been conferred upon Commercial Bank by various local and foreign institutions.
Our Approach to Environmental Sustainability
| Our Policy |
‘We are especially focused on ensuring that all major activities undertaken by the Bank are consistent with the requirements of our Social and Environmental Management System (SEMS), which provides a policy framework, an implementation system and a monitoring mechanism to ensure that the Bank conforms to performance standards.’ |
Compared to many industries, banking has a minute environmental footprint, consuming minimal natural resources and creating low emissions and waste. Energy and paper account for Commercial Bank’s primary use of natural resources. We are also highly conscious of the negative effects of waste, including discarded IT equipment, on the environment. We have initiated several action plans as explained below to minimise the negative impacts of paper use by centralising our business processes and using digital tools to improve efficiency -
benefiting both the Bank and our customers.
- A new centralised loan-approval system saves a substantial amount of paper.
- Electronic media are used to communicate with customers and shareholders.
- eStatements are now sent to credit cardholders.
- The Bank’s email system and intranet are widely used for internal and external communications.
- Web-based salary slips, as well as e-attendance and e-leave systems, all save paper.
- We constantly raise staff awareness of the paperless office concept, discouraging unnecessary printing of documents.
- This Annual Report is provided as a hard copy only to those shareholders who request it. By providing the report in CD-Rom, we have reduced the number of hard copies printed by more than 90%
Although such initiatives have reduced paper use, we are aware that these changes may have led to increased power consumption. However, we are confident that the net impact on the environment is positive - as we have taken the following steps to reduce energy consumption:
- Procurement of ATMs and IT equipment that comply with ‘Energy Star rating 5’ and are compliant with the ROHS (Restriction of Hazardous Substances) standards.
- Investing in procurement of energy efficient lighting equipment and air conditioning equipment leading to preservation of energy in the long run.
- Phase 2 of our server virtualisation and consolidation project was implemented resulting in a reduction in physical servers from 40 to 2 and racks from 16 to 8.
- Continued provision of funds to support reduction of greenhouse gas emissions and renewable energy generation.
Since most processes of the Bank are driven by information technology, we believe that it is our duty to minimise the hazardous environmental effects arising from the use and disposal of computer equipment and peripherals. An ongoing programme is in place to return the used IT equipment to suppliers/vendors who follow internationally recognised standards for disposal.
We have also taken steps to ensure that employees who are responsible for the procurement and disposal of assets carry out their roles in an environmentally friendly manner. Several other initiatives have been introduced to minimise the environmental impact of water usage, emissions, effluents and waste, and the design of products and services. The heads of the Bank’s Logistics/Procurement and Information Technology departments continuously monitor compliance to ensure these activities are carried out diligently. Our Staff Development Centre also ensures that employees are informed about such environmental initiatives when designing and conducting training programmes, covering topics such as credit, operations, housekeeping and compliance. We are determined to keep expanding Commercial Bank’s environmental commitment.
While the operations of the Bank do not significantly affect the environment, the activities of our customers and suppliers may. We have therefore put in place procedures to mitigate the indirect impact on the environment caused by business and industrial activities that we finance. Through our Social and Environmental Management System (SEMS), we work to ensure that any financing extended to customers is used to support operations that are sustainable, eco-friendly and not harmful to biodiversity. Of course, the SEMS is also applied to all major activities undertaken by the Bank.
A senior officer designated as ‘Social and Environmental Co-ordinator’ supported by his team is responsible for the management and administration of the SEMS in the Bank. The ‘Social and Environmental Management System’ (SEMS) spells out the social and environmental policy and procedures followed by the Bank in assessing the environmental and social risks as part of its risk assessment process.
In February 2013, the SEMS coordinator, under the purview of the Chief Risk Officer, made it possible for the Integrated Risk Management function to validate SEMS compliance on all credit proposals of Rs. 100 Mn. or more that have a risk evaluation. The SEMS coordinator is required to submit periodic confirmations - subject to audit by the Bank’s Inspection Department - that all relevant financing deals comply with the terms and conditions established by the International Finance Corporation. In future, Commercial Bank intends to apply the spirit of SEMS compliance to all credit proposals across all of our branches in Sri Lanka.
The Bank’s lending officers undertake desk reviews on an ongoing basis and visit projects we have financed to evaluate their environmental and social impacts, and to assess our clients’ fulfilment of agreed environmental and social obligations. These reviews may require borrowers to take mitigating actions in order to align projects in a timely manner with sustainability standards.
The mandate of Commercial Bank’s social and environmental co-ordinator is to ensure compliance with relevant procedures on every project undertaken. This officer receives ongoing training to update all required skills. We also take advantage of the co-ordinator’s expertise - augmented by external support as needed - to instruct and mobilise bank staff on environmental and other sustainability issues. In addition, we take every measure possible to ensure that our employees, as well as the decision-makers at client firms, understand and agree to operate by the policy principles outlined in the SEMS.
Lending officers are required to record a summary of all discussions and interactions in face-to-face encounters during client project visits, following checklists specially prepared for this purpose.
The Bank maintains a list of product and service providers who are subject to a stringent evaluation process before becoming preferred suppliers. Their businesses are assessed for critical criteria such as quality, cost, service level, delivery performance and environmental standards. Once a business unit communicates a need to the Bank’s central procurement division, purchases are done following the process approved by a clearly defined policy. Wherever possible we support local partners, helping them develop their businesses. As part of our relationship building, we establish formal procedures for evaluating suppliers’ negative environmental impacts, conducting regular audits and prioritising them accordingly.
Our Approach to Social Sustainability
Labour Practices and Decent Work
| Our Policy |
| ‘The Bank aspires at all times to be the employer of choice in its industry. This policy drives all human resources planning and activity.’ |
At Commercial Bank, people are our most valuable asset. Their professionalism, proficiency and diversity have contributed significantly to our success. We have in turn encouraged our employees by providing equal opportunities and remuneration, and by guiding them to reach their professional goals through training and skills development. We also strive to help our people achieve work-life balance. While staff relations are governed by the Shop and Office Employees Act, the Bank goes beyond these regulations in what we offer employees. Their welfare, progress and contentment are among our core priorities. We believe strongly that an effective collective bargaining process, covering employee compensation and human rights concerns, helps foster strong bonds with trade unions and the executive association, which in turn ensures the long-term viability of the Bank’s operations.
Employment
The Bank’s employment policy dictates that we must recruit the candidates best suited for open positions using fair, objective and internationally accepted evaluation methods. New employees are recruited to the Bank as either banking trainees or management trainees. Only specialised jobs involve mid-career recruitment, and we endeavour wherever possible to fill such vacancies from our internal talent pool. Through this overall process we expect to train the leaders of the future, imbuing them with Bank’s dynamic and innovative perspective while offering attractive career opportunities in the financial services sector.
Because customer service is a top priority for the bank, we invest time and resources in developing the human capital to deliver outstanding service across our entire network. Through whatever channel the customer chooses to interact with our Bank, he or she will receive the same level of service and care. While pursuing our goal of universal customer satisfaction, we also consider factors such as employees’ home location and travel distance to work before making any job placements or transfers. Such logistical concerns, however, are sometimes outweighed by the needs of business.
Labour-Management Relations and Grievance Handling Mechanism
All permanent employees of the Bank in Sri Lanka are eligible for membership in one of the two employee associations: Ceylon Bank Employees Union (CBEU) and Association of Commercial Bank Executives (ACBE). All CBEU members are covered by a collective agreement that includes their perks. ACBE members in the executive grades must undergo an annual performance appraisal that determines their perks.
The Bank has an open-door policy, addressing urgent issues through immediate discussions with the two employee associations. If the associations cannot amicably settle a dispute with the Bank, they have the option of referring such matters to the Commissioner of Labour. No cases of discrimination, ill treatment or any other dispute were reported during the review period.
The Bank also has an employee relations unit to handle grievances. Representatives of the Human Resource Department make periodic branch visits, enabling staff to voice grievances and address issues relating to their welfare. These visits help identify risks, uncover human rights violations, if any, and address any other employee concerns.
In the event of any significant operational changes within the Bank - such as staff transfers, new branch openings, establishing new business units, upgrading existing branches and outsourcing of activities - employees are always given timely notice via internal circulars.
Occupational Health and Safety
People are recognised as the main focus in Bank’s Human Capital Policy. The Bank deals with its employees’ work life balance issues in a responsible and dedicated manner since sensitivity towards individual needs, an accurate assessment of employee capabilities, potential and attitude is conducive to successful human resource management. The physical and mental well-being of its staff is important to the Bank, especially considering the stressful effects of the performance driven culture. Effective counselling for needy employees plays a pivotal role in this respect. At Commercial Bank, promoting the well-being of the employees is considered as a long-term investment.
Towards achieving the objective of a healthy workforce, we have in place a comprehensive medical insurance scheme for all permanent employees for indoor treatment in addition to reimbursement of outdoor medical bills.
The Bank has taken several steps to educate and train its staff attached to customer contact points on the procedure to be followed in instances such as attacks, aggression and robberies. They are also taught to deal with the possible consequences of disclosure of information on criminal activities to regulatory authorities. In addition, to preventing situations of this nature, the Bank has taken several measures including deployment of trained security personnel at all customer locations, installing burglar alarms systems and CCTV cameras, conducting fire drills, counselling and ensuring prompt support from specialised departments for branches needing assistance. Further, the Bank’s Integrated Risk Management Department reports such events to the Executive Integrated Risk Management Committee of the Bank together with the steps/actions taken to prevent such situations.
Training and Education
At Commercial Bank, we are committed to developing our people, as they are responsible for our competitive edge when it comes to sustainable business performance. We promote a culture that is conducive to learning, arming employees with the right knowledge, competencies and attitudes to create value - both in their own lives and careers, as well as for the Bank. Ensuring job satisfaction, assisting with career development and providing lifelong learning - these are the fundamental pillars of the Bank’s training and education strategy. Each year, our Staff Development Centre (SDC) conducts a comprehensive needs assessment, and prepares a comprehensive training calendar for employees at all levels. The SDC also monitors the effectiveness of all training programmes on an ongoing basis.
Putting in place an effective management team, with all members well-equipped to face the challenges ahead, ranks among the Bank’s top priorities. To realise this goal, our Senior Human Resource Managers are regularly trained in all procedures relating to labour laws and regulations, including respect for human rights.
Diversity, Equal Opportunity and Equal Remuneration
Commercial Bank is dedicated to upholding
the principle of equality in both career opportunities and employee remuneration. We seek for most qualified, educated and talented candidates and do not discriminate with regard to race, language, religious belief, gender or age.
We only consider
employees’ relevant skills
and competencies, as
those are the attributes that create sustainable value.
And by advancing employees according to merit, we improve their overall satisfaction - a
key component of stakeholder value.
Supplier Assessment for Labour Practices, Human Rights and Impact on Society Commercial Bank outsources non-critical functions to reputable agencies following a strict selection criteria. Applying a rigorously documented screening process, we scrutinise organisations that supply outsourced workers to ensure compliance with all applicable labour laws, including those covering minimum pay, whether they are paid on the due dates and provided with a salary slip with adequate details, working hours, leave, payment of statutory levies, child labour and more. In addition, a screening process vets suppliers before contracts are offered to ensure they are not involved in corrupt activities such as money laundering.
The Bank’s Human Resources Department continuously monitors labour practices and procedures to ensure protection of human rights. We ensure that half-yearly Employees’ Provident Fund and Employees’ Trust Fund return statements are submitted for scrutiny. As well, our Security Department confirms that all outsourced security officers are paid the statutory minimum wage by their employers.
Lastly, the Internal Audit Department of the Bank undertakes periodic reviews to ensure that all relevant procedures related to the foregoing areas are followed.
Organisational Responsibility
The Bank’s human resources function is overseen at the corporate level by the Deputy General Manager - Human Resource Management, who is assisted by two Chief Managers and a senior Manager.
Human Rights
| Our Policy |
| ‘Commercial Bank is committed to safeguarding the human rights of all employees and will not undertake any activity that could lead to the rights’ suppression.’ |
Commercial Bank’s employment practices reflect the human rights standards enshrined in the Universal Declaration of Human Rights proclaimed by the United Nations, as well as the Conventions of the International Labour Organisation. These cover:
- Freedom of association and the right to collective bargaining.
- The elimination of all forms of compulsory labour.
- The effective abolition of child labour.
- The elimination of sexual harassment in the workplace.
- The elimination of discrimination with respect to employment.
As a member of the UN Global Compact initiative, we have pledged to uphold the 10 principles stipulated under GRI Content Index when formulating policies and practices. Commercial Bank is committed to safeguarding human rights and to preserving human rights values and practices in all of our operations. We follow best practices governing aspects such as minimum working age limits, working hours, health and safety in the workplace, and collective bargaining principles. The Bank does not condone any form of forced or compulsory labour, child labour, discrimination or sexual harassment.
The Inspection Department of the Bank carries out periodic verifications to ensure that all aspects related to Human Rights referred to above are properly handled and managed by the Human Resources Department in line with the Bank’s laid down Human Resource Policies. In addition, the Inspection Department checks whether the grievance handling procedure has been appropriately applied in an unbiased manner in line with the procedure laid down in the circular instructions governing grievance handling.
Society
| Our Policy |
| ‘The overall goal of the Bank’s social policy is to generate measurable and sustainable social dividends for different stakeholders, in particular those which require empowerment most urgently.’ |
As the largest private sector bank in Sri Lanka, Commercial Bank embraces many responsibilities towards society at large. We ensure that both our enterprise and those in our supply chain conduct business in a manner that completely eschews moral hazards, corruption and anti-competitive behaviour.
We recognise our duty to serve underprivileged people who are often neglected by the financial industry for reasons such as high loan risk. This segment is served through our wide spread branch network with the assistance and guidance of the Development Credit Department. Products related to agriculture, industry and housing are offered at reasonable interest rates. And repayment plans are designed to match customer cash flows, demand minimal collateral and offer longer repayment periods.
The community benefits in two ways from our commitment to serving disadvantaged customers: We offer direct financing for small-scale cultivators, farmers and low-income earners with housing needs. And we also provide financing to small- and medium-scale entrepreneurs, who in turn create jobs in their localities. Moreover, we take that support a step further, providing customers with industry-specific technical expertise and helping them manage their finances. We are committed to increasing Bank’s ‘microfinancing’ operations, as we believe there are tremendous opportunities in this untapped market. Last year, the Bank launched three dedicated agricultural and microfinancing units in Ratnapura, Vavuniya and Tissamaharama, increasing the total number of such units to 12.
Further, we take serious note in providing funding for projects with negative impacts on local communities such as wind power generation projects, which require resettlement of local communities. We provide funding on these projects only when the borrower has proved the Bank that necessary clearances are obtained from the relevant authorities. All loan proposals identified having potential negative impacts on either society or environment in our primary investigations are referred the SEMS co-ordinator. Hence, the disbursement of loans will be done subject to any conditions as required by SEMS screening process. Further, we carry out post-disbursement reviews to ensure that the borrower fulfil the agreed commitments.
Commercial Bank makes annual contributions to its own CSR Trust Fund, along with annual donations to selected approved charities. As a matter of practice, we do not make donations to political organisations or to unknown parties without properly checking their backgrounds.
Commercial Bank has a designated compliance officer - a member of the corporate management team whose mandate is to ensure that the Bank fully complies with all applicable laws and regulations. In addition, the Bank’s Finance Division regularly submits a consolidated report on ‘Compliance with Mandatory Banking and Other Statutory Requirements’ to the Board Audit Committee. A similar paper is submitted by the Bank’s Bangladesh operation too. The contents of this paper are validated by the Bank’s Inspection Department through sample verifications.
The Bank has well-documented processes for dealing with anti-money laundering activities, and our policies in this area leave no room for conflict of interest. Corruption and activities involving anti-competitive behaviour are monitored by the Board Audit Committee through the ‘Positive Assurance Statement’ submitted quarterly by the Compliance Officer. Responsibility for identifying and taking action on corruption activities falls under the purview of Integrated Risk Management, Anti-Money Laundering, Operations and Inspection Department. The Bank’s Staff Development Centre conducts dedicated employee-training programmes on corruption and anti-competitive behaviour.
Product Responsibility
| Our Policy |
| ‘The Bank takes due cognisance of product responsibility and exercises control in this area to ensure that there is no misrepresentation of facts in terms of its operations, products and services, as doing so would result in adverse consequences for customers.’ |
Commercial Bank offers an extensive portfolio of products and services designed to meet a spectrum of needs across our customer base. We have pioneered several products and services that enhance customer convenience while ensuring privacy and compliance with all applicable laws and regulations. By offering a range of delivery channels, we ensure that products and services are readily available to customers and can be accessed with complete transparency.
Product/Service Labelling and Marketing Communications
The Bank’s products and services are clearly offered, explained, branded and directed to all sectors of the public. We disseminate clear, accurate, timely and all relevant information with respect to the salient features, on interest rates (both nominal and annual effective rates), fees, commission, charges, tariffs, terms and conditions. We deliver communications in three languages - Sinhala, Tamil and English - via various channels, including brochures, digital and non-digital display boards and units, and various other electronic and printed media.
The Bank’s Marketing Department, headed by the Deputy General Manager - Marketing, ensures that all Marketing communications materials adhere to the following criteria:
- Comply with corporate and information security policies.
- Reflect and support the corporate image of the Bank.
- Avoid exposing the Bank to possible litigation.
- Avoid racial content or inappropriate imagery and information.
- Are transparent and do not mislead customers.
- Avoid infringing intellectual property rights.
In addition, the Bank respects the following requirements:
- Approvals by both external and internal parties prior to the launch and communication of any customer- or employee-related promotional activity.
- Rules and regulations concerning displays, public-address systems, branding signage and similar materials.
- Approval from the relevant heads of departments for communications materials and website changes.
- Assurance from a designated department that information posted on the Bank’s website is appropriate, current and accurate.
Customer Privacy
Because safeguarding customer privacy is a paramount concern, the Bank has installed systems and procedures to ensure confidentiality. Key measures include:
- An Oath of Secrecy sworn by all employees.
- Restrictions on the disclosure of account information to any third party.
- Protection of online privacy.
- Assurance of email privacy.
- Maintenance of accurate customer information.
- Preventing access to banking transactions for underaged children unless a parent has given consent.
- Limitations and controls on employees’ access to the personal information of customers.
The Bank’s culture requires it to operate complying to all stipulated requirements to the letter and spirit in designing, marketing and delivering its product and services portfolio in a fair manner and this fact have been clearly communicated to the Heads of Departments responsible for these functions. The Bank’s Inspection Department carries out periodic verifications to ensure all departments and business units responsible for these functions are adhering to the requirements of the instruction circulars and other compliance requirements stipulated by the regulators. During the period covered by this Report, there were no recorded incidents of non-compliance to rules, regulations or ethics in labelling and marketing communications, nor any breach of customer privacy. See ‘Litigations Against the Bank,’ Note 49 to the Financial Statements.
Evaluation of the Effectiveness of Management’s Approach to Economic, Environment and Social Sustainability
Commercial Bank sets key performance indicators (KPIs) for all divisions and executive officers, in keeping with our target-driven culture. These KPIs enable us to measure the contributions of each business division and individual employee as we pursue the objectives of economic, environment and social policies. We reinforce the achievement of targets through effective action plans and resource-allocation mechanisms, linking various functions to the Bank’s overall strategy, as dictated by our vision and mission. The numerous awards and accolades Commercial Bank has earned in the areas of economic, environment and social sustainability speak to the effectiveness of our approach. A summary of this third-party recognition appears under Awards and Accolades.
The Board of Directors reviews the effectiveness and appropriateness of all defined goals, action plans and processes for achieving targets, assessing them against feedback received through stakeholder engagement - and taking corrective action when necessary. The Board is supported in this process by its Sub-Committees and several senior management committees, which review performance against set targets, as well as compliance to Bank policies and Government laws and regulations. The results, including any specific incidents of non-compliance, are communicated to the Board.