Board rooms to become more robust, transparent

Board rooms to become more robust, transparent

Corporate board rooms will go through a sea change with the Kotak committee on corporate governance making some far reaching recommendations on inducting more independent directors, timely disclosure of related-party transactions and splitting the role of chairman and MD/CEO. The formalisation of information flow between promoters and companies will make sure that allegations made against Infosys and Tata Sons are not repeated, say CEOs and corporate lawyers

The recommendations are grounded in market realities and benchmark India against best global governance practices. Though a few promoters said recommendations like appointing more independent directors, including women, would be a difficult task due to lack of talent.

“The recommendations will have far-reaching implications on the board rooms with half of the board consisting of independent directors and dividing the role of chairman and MD/CEO. This is the best in global standards and will change Corporate India’s board room for ever and for good. But for many midsized Indian companies, it would be difficult to enforce these stringent governance norms as they are not used to them,” said a CEO of a company asking not to be named.

If these recommendations are accepted,Reliance Industries will not only have to separate the role of its chairman and MD, Mukesh Ambani, but will also have to include more independent directors, including a woman director apart from Nita Ambani, who is from the promoter family. Many Tata group companies will have to include more independent directors – especially after their role became critical in the aftermath of former group chairman Cyrus Mistry’s battle with group patriarch, Ratan Tata. Many Aditya Birla group companies will have to hire women directors though Kumar Mangalam Birla is not the MD and CEO of any group company.

Many company owners have welcomed the move. “The winds of change are expected to separate the wheat from the chaff. This will augur well for the industry,” said Harsh Goenka, chairman of the RPG group, which has professional management in all its companies.

“The effort to usher greater transparency and improve autonomy and accountability of directors would, hopefully, be a game-changing milestone towards better governance,” said Samir Paranjpe, partner, Grant Thornton India.

“The recommendations are aimed at achieving the dual objective of shareholder protection and long-term value creation by companies,” said Bengaluru-based investor advisory firm Institutional Investor Advisory Services. The report builds on the legal framework established by the Companies Act, 2013, and the SEBI Listing Obligations and Disclosure Requirements, putting recommendations within the reach of corporates. Besides, the transition window from between 2018 and 2020 provides boards time to adjust, allowing for phased implementation of the recommendations, it said.

Another important recommendation of the committee is that the market regulator, Sebi, will have the right to pull up auditors for any lapse in corporate governance norms and penalise them. In the past, some of India’s top auditors, including some from the Big Four firms, were found clearing annual reports despite companies being accused of corporate governance violations as in the case of United Spirits. This recommendation would make sure that auditors, who are seldom pulled up by their self-regulated body, do a thorough job while certifying accounts, said a lawyer.

The recommendations are grounded in market realities and benchmark India against best global governance practices

The Business standard, New Delhi, 07th October 2017

Household debt up, but India still lags emerging-market economies: RBI

Although household debt in India is rising, driven by increased borrowing from the financial sector, it remains lower than in other emerging-market economies (EMEs), the Reserve Bank of India (RBI) said in its Financial Stability Report. It added that non-housing retail loans, largely taken for consumption, accounted for 55 per cent of total household debt.As of December 2024, India’s household debt-to-gross domestic product ratio stood at 41.9 per cent. “...Non-housing retail loans, which are mostly used for consumption purposes, formed 54.9 per cent of total household debt as of March 2025 and 25.7 per cent of disposable income as of March 2024. Moreover, the share of these loans has been growing consistently over the years, and their growth has outpaced that of both housing loans and agriculture and business loans,” the RBI said in its report.Housing loans, by contrast, made up 29 per cent of household debt, and their growth has remained steady. However, disaggregated data sho...

External spillovers likely to hit India's financial system: RBI report

While India’s growth remains insulated from global headwinds mainly due to buoyant domestic demand, the domestic financial system could, however, be impacted by external spillovers, the Reserve Bank of India (RBI) said in its half yearly Financial Stability Report published on Monday.Furthermore, the rising global trade disputes and intensifying geopolitical hostilities could negatively impact the domestic growth outlook and reduce the demand for bank credit, which has decelerated sharply. “Moreover, it could also lead to increased risk aversion among investors and further corrections in domestic equity markets, which despite the recent correction, remain at the high end of their historical range,” the report said.It noted that there is some build-up of stress, primarily in financial markets, on account of global spillovers, which is reflected in the marginal rise in the financial system stress indicator, an indicator of the stress level in the financial system, compared to its p...

Retail inflation cools to a six-year low of 2.82% in May on moderating food prices

New Delhi: Retail inflation in India cooled to its lowest level in over six years in May, helped by a sharp moderation in food prices, according to provisional government data released Thursday.Consumer Price Index (CPI)-based inflation eased to 2.82% year-on-year, down from 3.16% in April and 4.8% in May last year, data from the Ministry of Statistics and Programme Implementation (MoSPI) showed. This marks the fourth consecutive month of sub-4% inflation, the longest such streak in at least five years.The data comes just days after the Reserve Bank of India’s (RBI) Monetary Policy Committee cut the repo rate by 50 basis points to 5.5%, its third straight cut and a cumulative reduction of 100 basis points since the easing cycle began in February. The move signals a possible pivot from inflation control to supporting growth.Food inflation came in at just 0.99% in May, down from 1.78% in April and a sharp decline from 8.69% a year ago.A Mint poll of 15 economists had projected CPI ...

CA Online

Search This Blog