Corporate Governance

The RBF is established as an independent institution under the RBF Act (1983) and is fully owned by the Government of Fiji. The functions and duties of the Reserve Bank are specified in the RBF Act (1983), RBF (Amendment) Decree 2009, the Banking Act (1995), the Insurance Act (1998), the Exchange Control Act (Rev. 1985), the Financial Transactions Reporting (FTR) Act (2004), Payment and Settlement Systems Oversight Regulations (2004), the Fiji National Provident Fund Decree (2011), the Companies Act (2015) and the Fair Reporting of Credit Act (2016).

Section 153 Part D of the 2013 Constitution of the Republic of Fiji also states: –

(1) The Reserve Bank of Fiji is the central bank of the State, whose primary objects are –

(a) to protect the value of the currency in the interest of balanced and sustainable economic growth;

(b) to formulate monetary policy;

(c) to promote price stability;

(d) to issue currency; and

(e) to perform other functions conferred on it by a written law.

(2) In pursuing its primary objects, the Reserve Bank of Fiji must perform its functions independently and without fear, favour or prejudice, but there must be regular consultation between the Reserve Bank of Fiji and the Minister responsible for finance.

(3) The powers and functions of the Reserve Bank of Fiji are those customarily exercised and performed by central banks.

(4) The Governor of the Reserve Bank of Fiji shall be appointed by the President on the advice of the Constitutional Offices Commission, following consultation with the Minister responsible for finance.

(5) A written law must provide for the composition, powers, functions and operations of the Reserve Bank of Fiji.

(6) The Reserve Bank of Fiji must deliver quarterly and annual reports to Parliament, and any other reports when required by law, or requested by resolution.

The Vision of the Bank is “Leading Fiji to Economic Success” and is supported by the Mission statements and a set of Values.

The Governor

The Governor serves as the Bank’s Chief Executive Officer and is responsible to the Board for the management of the Bank and the execution of its policies.  Mr Ariff Ali was initially appointed as the Governor of the Reserve Bank of Fiji with effect from 11 September 2017 for a term of five years.  He has been reappointed for another five years, effective from 11 September 2022.  He served as the Deputy Governor since 27 May 2014 and acted as Governor from 28 May 2017 until his appointment as Governor.

Board of Directors

The Reserve Bank Board comprises the Governor, who serves as the Chairman, the Permanent Secretary for Economy (PSE), as an ex-officio member; and five other non-executive members, for a total of seven.  Appointments to the Board are made by the Minister for Economy, as stipulated in the RBF Act.  A Director may be appointed for a period not exceeding three years and is eligible for re-appointment.  Mr Shiri Krishna Gounder, PSE, is an ex-officio member while other members of the Board are Mr Pradeep Patel, Mr Tony Whitton (OF), Ms Nikita Patel and Mr Bobby Naimawi.

Board Meetings

Under the RBF Act, the Board is required to meet at least ten times a year.  Four Directors form a quorum for a meeting of the Board.  In the absence of the Governor, the Deputy Governor participates in the Board meetings and is entitled to exercise a vote.  In addition, in the absence of the Governor, another Director present shall be appointed by consensus of the Directors to chair the Board meeting.  Board meetings are usually held on the last Thursday of each month.  Subsequent to the COVID-19 pandemic, the Bank resorted to virtual Board meetings up to the time when the restrictions were lifted.  The Bank’s Corporate Governance Charter allows for entirely virtual Board and internal Committee meetings.

Each Director is required under the RBF Act to sign a declaration to maintain confidentiality in relation to the affairs of the Board and the Reserve Bank upon appointment to the Board. The Bank has a Conflict of Interest (COI) Policy and maintains a COI Register for its Board Directors.  Depending on the nature of matters discussed and the conflict declared, Directors may be excused from the meeting.  All conflicts of interests are minuted and noted in the COI Register.

Board Committees

The RBF Board has two Committees – the Audit and Risk Committee and the Governance Committee, which comprise non-executive members.  Decisions of the Committees are submitted to the Board for ratification.  The functions of the two Committees are described below.  The Deputy Governor attends meetings of both the Committees on a regular basis as the chief representative of the Bank’s management.  Other senior Bank executives are also invited to these meetings, as required.

The Board Audit and Risk Committee (BARC) monitors the adequacy of the audit function in the Bank and assists the Board in fulfilling the requirements of the RBF Act in relation to the Bank’s accounting and reporting practices.  In carrying its responsibilities, the Committee reviews and monitors the following functions:

• external and internal audit;
• risk management and business continuity;
• statutory compliance; and
• internal accounting control.

The role of the Board Governance Committee (BGC) is to strengthen the governance of the Bank and to ensure the accountability of the Office of the Governor to the Board.  The main functions of the Committee are to oversee compliance with the Bank’s Corporate Governance Charter and undertake the bi-annual performance appraisal of the Governor and Deputy Governor based on agreed key performance indicators (KPIs).  Board members who are not members of the BGC are also invited to assess the performance of the Governors.  In addition, all staff-related matters such as the review of the terms and conditions of employment for staff and members of Executive Management are reviewed and approved by this Committee.

For continuous improvement, the Board undertakes an annual assessment of its own performance as well as that of its two Committees, a process which has been in place since 2013.  Since 2017, members of Executive Management also provide a performance assessment of the Board Directors on an annual basis.

Annual evaluations are conducted for the Bank’s internal and external auditors.  The results of the assessments are shared with the internal and external auditors during the private meetings of BARC.

On a quarterly basis, a report on all COI declared is provided to the BGC.  Directors are also required to complete a Declaration of Compliance and COI at the end of the year.  The Declaration of COI database is updated during the course of the year by the Directors, as necessary.

Bank Management

The Executive Management of the Reserve Bank comprises the Governor, Deputy Governor and all Heads of Groups.  The Governor is advised by a number of internal committees within the Bank:

• the Executive Management Committee meets fortnightly to consider the management and day-to-day operations of the Bank;
• the Monetary Policy Committee meets monthly, or more often as necessary, to discuss economic and monetary developments;
• the Market Operations Policy Committee meets monthly to discuss the Bank’s domestic markets operations;
• the Financial System Policy Committee meets monthly to review financial system soundness and stability;
• the Investment Committee meets monthly to provide strategic direction and oversight of the Bank’s domestic and foreign investments;
• the Financial System Development Policy Committee meets monthly to discuss the financial system and developments in capital markets, payment systems, financial inclusion and consumer issues including complaints management;
• the Corporate Services Policy Committee meets quarterly to discuss matters relating to internal services;
• the Payment Systems Policy Committee formed in March 2022 meets monthly to discuss matters involving domestic and international payment and settlement issues, and the licensing, regulation and supervision of payment systems in Fiji;
• the Currency Technical Committee meets monthly to discuss issues relating to currency management and numismatics;
• the Human Resources Steering Committee meets quarterly to discuss matters relating to implementation of the human resources (HR) Strategic Plan and provides oversight to the overall HR functions of the Bank;
• the Information Technology (IT) Steering Committee meets quarterly to discuss IT development and operations; and
• the Risk and Business Continuity Management Committee meets quarterly to identify and assess risks and their impact on the operations of the Bank, formulates effective strategies to address these risks as well as responds, manages and recover from any incident or crisis event.

The Governor (or in his absence, the Deputy Governor) chairs all these Committees.

Other special and technical Committees of the Bank are chaired by the Deputy Governor for operational oversight and to create an independent channel for appeals or complaints, such as the Ethics Committee, Tenders Committee, Project Committees for the NPS and Website, amongst others.

Delegation of Authority

All activities and expenditure in the Bank must be authorised in accordance with the respective delegations, policies and procedures.  The Board receives monthly financial reports comparing the actual outcomes against budget.

The Code of Conduct policy provides guidance on compliance with ethical standards.

The Declaration of Compliance, signed annually by all staff, provides assurance of understanding and compliance with the Code of Conduct, Delegation of Authority and all internal policies of the Bank.

The Delegation of Authority is updated regularly to ensure that it is current and relevant.

The Bank’s most significant risks are Strategic, Financial, Operational and Reputational risks. Governance risk is a sub-set of strategic risk.  The Bank has an established framework to ensure risks to corporate governance are regularly evaluated and properly managed by the Board.

The framework has structures, policies and procedures, which set the delegation of roles & responsibilities, accountability & transparency in decision making processes, manage conflict of interest situations, test fitness & propriety against benchmarked performance and scrutinises remuneration arrangements.

The Delegation of Authority is updated regularly to ensure that it is current.

Strategic Plan

The Bank’s 2019-24 Strategic Plan guides the direction and initiatives of the Bank from which annual work plan deliverables are distilled.  Achievement of these deliverables is assessed against targeted measures of success and compared to actual outcomes during the reporting periods.  A continued focus on excellence and innovation in policy formulation and operational efficiency, underpins the success of the themes and priorities identified within the Strategic Plan.

The focus continues to be on the core role of protecting macroeconomic and financial stability while managing relations with the Government, private sector and public expectations as the nation embarks on its economic recovery journey.  Risk management also continues to be at the forefront, together with the strengthening of the existing HR framework backed by innovation.  The lessons learnt from COVID-19 in Year 2 of the plan are also expected to feed into exploring innovative solutions.

Despite the challenging circumstances created by the COVID-19 pandemic, the vision, themes and priorities of the strategic plan were assessed to be still relevant for the remaining term.  With the year seeing the lifting of COVID-19 restrictions, work output progressed as planned, albeit delays were encountered in some projects due to issues of supply chain disruptions.

Planning Cycle and Monitoring

In January, the Bank and Group strategies were reviewed with the relevant changes approved in February.  Groups reviewed their work progress for the first six months of the fiscal year (August-January) and a report was submitted to the Board.

The initial formulation of the Bank’s Work Plan for the new FY commences in April.  The Work Plan is developed and presented in line with the strategic priorities and missions of the Bank.  Every output is aligned to the strategic priority and the strategic outcomes, which in turn is expected to contribute to the achievement of the Vision of the Bank.

From April, extensive discussions were held on the new Annual Work Plan.  In resourcing the Plan, the Bank uses zero-based budgeting in determining the necessary financial resources for the coming year, based on the work plans submitted by the Groups.

Given the projections for this year’s income, the Bank again carried out cost-cutting exercises at the beginning of the year, especially in revisiting operating expenditure as well as reviewing any large capital expenses.  However, noting the positive outcomes on the income side as well as the upcoming tasks and need for resources, the Bank filled vacant positions towards the end of the FY.

The operating expenditure for the 2021-22 FY increased by $0.22 million compared to the 2020-21 FY and decreased by $0.04 million in comparison to the 2019-20 FY.  Similarly, capital projects that were delayed or on hold were commenced to ensure continued efforts towards driving the strategic theme of renewing ways of doing business and reinforcing a culture of innovation.

The final Annual Work Plan and Budget for the 2022-23 FY were presented and approved by the Board at its June meeting.

In terms of monitoring, Heads of Groups are responsible for ensuring that scheduled outcomes within both the Strategic and Work Plans are achieved.  A review of the progress in the implementation of the 2019-24 Strategic Plan is undertaken on a quarterly basis.

During the third year of the 2019-24 Strategic Plan, the Bank met the majority of its planned outcomes and targets.  Some outputs needed to be reprioritised, however, the Bank continued to meet its mandates as outlined in the plan with the outcomes achieved clearly showing the impact of the work that has been done over the three years.

Risk Management

Risk management remains central to all its activities in the Bank.   The Bank has in place a risk management framework, which comprises policies and procedures to effectively manage emerging risks.

The Bank’s primary risks are those directly related to its core mandates of macroeconomic stability and financial stability.

The Bank identifies emerging risks and implements controls within its ambit to mitigate the impact on system stability to safeguard its core mandates.  Risk management in relation foreign reserves management are considered critical to safeguarding the country’s reserve.  In line with this, there is frequent review of the strategy, benchmarks and controls.  During the year, the Foreign Reserves Management Operational Manual was also reviewed to ensure that it remains current and relevant as per the changing operating environment.  In addition to this, the Bank manages liquidity risk, credit risk and market risk as well as operational risks including information technology risk, cyber risk and people & culture risk.

The senior management is responsible for consistently implementing and maintaining mitigations for risks arising within their ambit and there is a structured process throughout the organisation with relevant policies, processes and systems in place for managing specific risks.

Ongoing quality management initiatives and capacity building continued to be the focus of the Bank’s development programme.  The HR Steering Committee with a dedicated focus on driving effectiveness in HR strategies and policies is key to strengthening human capital and workplace culture while the IT Steering Committee focuses on IT-related matters.

The regular review of policies and procedures together with awareness training for staff helps to strengthen the risk culture and overall risk management in the Bank.

The Bank also continued its review of the Risk Management Framework through the 2020-21 FY to ensure its continued alignment with the latest standards in risk management practices as well as relevance to global and domestic developments.  This included reviews to the Bank’s policies on Fraud, Gifts & Entertainment and Service of Legal Documents.  In addition, the updating of the Bank’s risk registers continued.

Incident Reporting is also part of the Risk Management Framework of the Bank.  A reporting framework is in place to ensure incidents are identified, reported and that monitoring is ongoing to ensure that all incidents are resolved effectively. In addition to this, where required, processes or internal controls are reviewed to ensure that any risks arising are mitigated.  This also feeds into the internal assurance process whereby specific processes, areas are reviewed and findings/recommendations are provided to the relevant group.

The Bank’s Business Continuity Plan (BCP) was continually reviewed during the year, specifically on the workforce and workplace safety arrangements as a result of COVID-19 updates from the relevant local authorities.  This has now translated into a living document with general COVID safe behaviours outlined for staff as we transformed into living with COVID.

The Bank’s BRS is the backup site for critical operations should the Reserve Bank’s main building become inaccessible due to an emergency or a disaster or if the systems in the building become inoperable.  Critical operations such as foreign reserves management, finance management, settlements and some domestic market processes, including FIJICLEAR operations are tested at the site.

Best practice requires that BCP procedures are regularly tested to ensure its effective readiness for emergency situations.  The Bank’s crisis communication procedures are established and practised through call trees.  Emergency evacuation drills continue to ensure awareness of emergency procedures by staff and tenants of the RBF building.

During the year, the Bank updated its procedures and operations, in line with the Ministry of Commerce, Trade, Tourism and Transport (MCTTT) workplace safety protocols and other regulations enacted.

The Risk Management and Communications Group forms the second line of defence in the management of risks in the Bank.  In terms of foreign reserves managements, the Middle Office is within the Risk Management Groups independent of the front office and back office and is responsible for monitoring and reporting on risks relating to the Bank’s reserves management operations.  Compliance and performance reports are prepared by the Middle Office, discussed at the Investment Committee meetings held monthly and reported to the Board.

The RMCG^[1] also ensures that the Bank’s interests are protected against legal risks.  These risks are mitigated by the provision of legal advices, litigation, drafting, statutory compliance, legislation and policy reviews and the enhancement of the Anti-Corruption Framework developed in consultation with the Fiji Independent Commission Against Corruption (FICAC) since 2018.  The Bank also participated in the Anti-bribery workshop by FICAC to champion the cause against such unethical practices in the public sector.  There were no pending litigation against the Bank during the year.

The internal audit function as a third line of defence continued to provide independent assessments to ensure the effective oversight of risks in the Bank.  The internal audit function is outsourced to an external firm.

Areas for improvement identified by internal and external audits are addressed as appropriate and form part of the RMCG monitoring and reporting to the BARC.  The Board, the BARC, the BGC and the Risk and Business Continuity Management Committee also contribute to the review and strengthening of the Bank’s risk management function.

Corporate Governance Policy

• Introduction

1.1 The Reserve Bank of Fiji (“Bank”) has the primary responsibility to practice good corporate governance as stipulated in the Constitution as well as promote a sound financial structure, which includes carrying out its duties in the interest of the country and the people of Fiji as reflected under Part IV of the RBF Act (1983). In this regard, the Bank is guided by its corporate governance policy and puts the utmost priority on good governance, ensuring independence, accountability and transparency in carrying out its duties.

1.2 The objective of the Policy is to: (1) ensure the implementation of an effective corporate governance framework that is consistent with the Bank achieving its mandate; (2) guide long term prosperity and value development for the organisation; (3) preserve the interest of and exercise responsibility and accountability to relevant stakeholders.

1.3 The Bank is committed to ensuring that effective good corporate governance remains central to its activities, forms its foundation and hence is a core management competency. The aim is to ensure that good governance is embedded in the Bank’s processes and culture, thus contributing to the achievement of its core objectives and value creation over time.

• Corporate Governance Strategy

2.1 At the Bank, Good Corporate Governance is about placing utmost priority to being ethical and accountable in all conduct, in order to protect and maintain the RBF’s independence and credibility, and ensure transparency in its actions.

2.2 The three pillars of corporate governance that the Bank aligns to are:

 independence, accountability and transparency, which support the basis for the legal framework of the Bank as enshrined in the Constitution of Fiji. In this sense, the Bank identifies, assesses and has governance oversight at several levels including Board, management and staff.

2.3 At the Bank, good governance culture means that:

1. Our staff adopt the Bank’s code of conduct, which provides guidelines on appropriate conduct and addresses issues of confidentiality, conflicts of interest, integrity in reporting, accountability and the fair treatment of all stakeholders;
2. The Bank maintain a record of breaches of the code of conduct, have a mechanism to deal with such breaches and address such breaches in a manner that maintains the highest standards of integrity.

iii. The Bank have a signaling mechanism that sets out avenues for legitimate concerns to be objectively investigated and addressed in confidence and without fear of reprisal.

1. The Bank policies clearly indicate to whom concerns can be escalated to; the avenue for reporting; and communicates the policy to relevant third parties to allow reporting if required.

2.4 The Bank, under the Constitution, is accountable to the people of Fiji. The RBF Act (1983) assigns responsibility to the Bank to carry out its statutory duties in an accountable manner.

2.5 The Bank continues to create awareness and engage with stakeholders regularly to ensure that information on our policy objectives and decisions are readily available and clearly communicated.

3.0 Corporate Governance Structure

Oversight of the RBF’s governance function is by the Board and the respective sub-Board and management committees. Executive Management of the Bank, Governor’s Office and Board and the Risk Management and Communications (RMC) Group as well as the External Audit contribute governance.

3.1 Role of the Board

The Board is responsible for the oversight of the entire governance process. The Board Audit & Risk Committee (BARC) and Board Governance Committee (BGC), both subcommittees of the Board, assists the Board to ensure a dedicated focus on governance of the Bank.

The Board Secretary is responsible for coordinating board functions, providing secretariat function in committees as necessary. The responsibilities of the Board and Board Secretary are covered within the Corporate Governance Charter.

3.2 Role of Executive Management

The Bank’s Executive Management (EM), consisting of the Governor, Deputy Governor and Group Chief Managers, have the overall executive responsibility for governance in the Bank and their respective Groups. EM is accountable to the Board for ensuring adequate governance structures, practices and processes.

The Policy Committees, which comprise of the Bank’s EM, assists the BARC and BGC with regard to its executive responsibility for governance in the Bank. Their role is to ensure that the Bank has in place an effective governance structure and that the responsibilities and accountabilities are identified, assessed and effectively managed in accordance with the Bank’s Corporate Governance Policy as well as the TOR for the respective committees.

Senior management may establish working groups in the Bank to develop strategies for the governance of Bank. The Committee retains oversight of these areas whilst the relevant Groups facilitate appropriate coordination and implementation across the Bank.

3.3 Role of the External/Internal Auditors

The BARC engages an external auditor to provide an independent opinion that the Bank’s financial reports are true, fair and are compliant with the applicable regulations, together with a management letter on the soundness of Bank.

The external auditor is required to check and confirm the absence of fraudulent activities and check the processes used to monitor statutory, regulatory compliance and reporting of disclosures.

The BARC engages internal auditors to provide independent assurance on high risk areas. This function reports directly to the BARC and is outsourced.

3.4 Role of Risk Management and Staff

The Bank’s risk management framework is set to safeguard the security, continuity, compliance and integrity of its operations in support of strategies and corporate objectives. The accountabilities of management and staff in respect of the Bank’s risk management framework are set out in a range of policies, which are reviewed regularly and approved by the Risk and Business Continuity Management Committee.

The Risk Management and Communications Group is responsible for facilitating, coordinating and providing advice on the governance process and all staff are responsible for adhering to governance processes and procedures.

• Corporate Governance Policy Environment

4.1 The Bank is committed to the principles of corporate governance in compliance with recommended best practices. The Bank’s corporate governance framework reflects international best practices and standards, and links to governance arrangements within existing policies that ensure effective governance practices.

4.2 There are 16 policies and guidelines that set, monitor and evaluate the appropriateness of governance. These vary from the Code of Conduct Policy that guides the setting of ethical standards and code of business conduct to the Anti-Corruption and Bribery Framework which covers the requirements identified under FICAC’s Prevention of Bribery Act 2007, and contains provisions for whistle blower protection and the need for the disclosure of conflicts of interest by staff. The conflict of interest provisions under the Corporate Governance Charter and the Conflict of Interest Policy are for the Board and staff.

4.3 Accountability and Transparency are key governance objectives, and financial reporting and disclosures are presented within the Bank’s Annual Report to demonstrate stewardship through the publication of Audited Financial Statements.

4.4 Risk Governance is critical to the effective functioning of the Bank. The management of key risks are set within the Risk Management Framework and the Board’s responsibility for risk management is identified under the Corporate Governance Charter. The Risk Management Framework has a list of policies to help guide the relevant risks including the AML/CFT Policy which is a requirement under the FTR Act.

4.5 The complaints management framework for the Bank and the financial sector has relevant mechanisms for managing complaints.

4.6 Operational excellence with focused, flexible and efficient business processes, innovation and continuous improvement driven by quality teams also contributes to the sustainability of bank operations and practices.

4.7 The Risk and Business Continuity Management Committee is charged with the duties of ensuring the Bank’s preparedness to ensure operations critical to the Bank will continue.

4.8 Effective internal and external communication is an essential part of the Governance function, both to ensure that our policy stance is understood by external parties and timely information and right culture is set within the Bank. The ability to engage and influence key stakeholders is vital to achieving success and plays an important role in governance.

Reserve Bank of Fiji

July 2023

[1] Risk Management and Communications Group.