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Corporate India has stressed the need for self-governance, rather than regulations, to ensure compliance.
Speaking at a CII-organised session on Corporate Governance, Mr B Muthuraman, President-designate, CII, and Vice-Chairman, Tata Steel, said India had a better system of financial laws and banking at the time of its Independence compared with other countries.
“Yet it is only after liberalisation, and when the share of business increased, have we started paying special attention to better governance. Mere tweaking or improving laws is not going to solve the problem that emanates from human behaviour. Laws and regulations follow good practices and not the other way around,” he said.
Advocating drastic change in the way board of directors in the company function, Mr Muthuraman said, “Much of a board's time is spent on taking care of compliance issues and how much is spent in creating a vision, or debating the strategy of an organisation. There is an urgent need for companies to allocate the board's time to strategies and debate.”
“In India we have a lot of passion. But at this point in time, we can do better with process orientation. It is a more reliable way to get work done as only hard work will not achieve the goal. If you can add process into your passion, you can achieve better results,” he said.
Openness
Mr Jamshyd N. Godrej, Past President, CII and Chairman and Managing Director, Godrej & Boyce Manufacturing, said governance is all about openness and directness.
According to Mr Shailesh Haribhakti, Member, CII Corporate Governance Council & Independent Director, India is a growing country which will face difficulties. “But as long as we believe in what we do and do what is required, everything can be tackled. In corporate governance we ask the government to take decisions but actually it is in the hands of the company,” he said.
Mr Neville Dumasia, Executive Director, KPMG in India, said corporate governance is all about accountability flowing both ways. Managements need to articulate and put forth difficult points for deliberation and gain insights and inputs from their boards. Good corporate governance is about making sure that there is a strong partnership between the two, he said.
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