The Indian Banking Industry hit rough weather as a cloud of suspicion engulfs executives of two renowned banks. The banking industry was already reeling under a million dollar scam. Current situation and circumstances raised eyebrows on long term credibility of banks safeguarding public interest in the form of deposits and other financial services as 'Authorized Dealer' (ADs). Corporate Governance, Stakeholder Interest, Conflict of Interest, Policies and Procedures are under the scanner in these cases and this calls for robust governance backed by a constructive board. Boards have always acted as a lighthouse for the organizations but should move away from peaceful co-existence to constructive criticism.
In the case of Punjab National Bank scam there were procedural lapses where internal systems in the bank were not interacting with each other and there was a clear oversight of top management leading to breeding ground for malpractices.
Transparency plays a pivotal role in overall functioning of the corporates. Governance primarily are the policies and procedures which dictates corporate behaviour and safeguards the interest of all stakeholders. While interest of all the stakeholders are paramount; transparency is the key to manage conflict of interest. On the other hand in case of Axis Bank, RBI has raised concerns on re-appointment of current MD and CEO for the fourth term citing bank's performance and deteriorating asset quality.
Strong corporate governance maintains investor's confidence over a period resulting in accomplishing corporate goals and objectives in line with stakeholder expectations. Corporate board and members of the board must play a more constructive and proactive role rather than reactive to avoid distress situations. Constitution of the board and experience each member bring to the table has always been a point of discussion. Bank boards should be strong and diligent enough to take proactive and remedial action before regulators swing into action. Off-late there are concerns over the role of the boards as custodian of shareholder interests and lax corporate governance.
In the wake of recent developments there are critical questions that Indian corporates need to answer in the light of governance measures –
- Role and effectiveness of board
- System of board selection and evaluation
- Responsibility of Corporate Governance
- Conflict of Interest – Guidelines and by Whom
- Succession planning of MD and CEO
- Role of directors in case of information management
- Role of regulators
In a perfect state, Leadership, Strategy and Technology blends judiciously to achieve optimal outcome for organizations. Project Management focuses on these three pillars provides strategic direction in terms of vision and mission of an organization. If any of these take a back-seat overall output in terms of Quality get compromised and organizations find themselves in conflicting difficult situations.
Thanks and Best Wishes
Tanish Mathur, PMP, PMI-ACP