Finance Minister Nirmala Sitharaman on Saturday tossed India Inc’s demand to do away with the controversial norm around splitting of Chairman-cum-Managing director (CMD) post to the SEBI’s court, stating that capital market regulator must also hear Corporate India’s concern on this front.  She was responding to a plea made by Sanjiv Bajaj, CII President-Designate and Chairman and Managing Director of Bajaj Finserv that the Government needs to “intervene” on the issue, which he described as “regulatory overreach” by SEBI that would create lot of problems for Corporate India. Bajaj highlighted that many of these corporate governance requirements are not mandatory even in advanced economies like the US, UK and France. Such decisions should be left to the discretion of the Board and shareholders, Bajaj said at CII’s post budget interaction with the Finance Minister and her team of senior Finance Ministry officials including Revenue Secretary Tarun Bajaj and Economic Affairs Secretary Ajay seth in the capital on Saturday.  It maybe recalled that SEBI had amended its listing regulations to stipulate that from April 1 this year the role of Chairman and Managing Director had to be separated; Chairman and Managing Director should not be related and that the Chairman should hold only non executive positions.  Sitharaman, who is also the Corporate Affairs Minister, said at the CII post budget meeting that she had some time back reviewed with SEBI the issue of splitting of post of Chairman and MD of companies. “Some good number of companies had followed it. That is not to say others should. This norm which was brought in by SEBI four years ago was one of the Global best practice and introduced with the aim of moving towards best practices so that companies are professionally run. But I do agree that the way Indian companies have been built over the decade and over a century also depends so much on the family and also the related member. So Iam of the view that SEBI— which is an independent regulator .. Iam not giving them diktat — Iam voicing my view—that I think if Indian companies have a view then SEBI should also hear them. I will leave it there and I hope that it indicates where Iam coming from.  This should be giving you ( Sanjiv Bajaj) some breadth of fresh air and moment to heave a sigh of relief. So let’s see and I will leave it there”, Sitharaman said.  Currently over a third of the top 500 companies by market capitalisation are yet to comply with SEBI ‘s requirement to split the post of Chairperson and Managing Director. This norm kicks in from April 1 this year. As many as 155 companies have the same person as Chairman and MD and CEO as on January 13,2022, according to data compiled by primeinfobase.com. These include leading private sector companies such as Reliance Industries, HIndustan Unilever, Bajaj Finserv as well as public sector giants like ONGC, NTPC and Coal India.  Interestingly the banking sector — both public and private sector— have already completed the task of splitting the role of Chairman and Managing Director, an economy watcher pointed out. But the corporate sector have been reluctant in conforming to this norm, it was pointed out.

India Inc’s duty

Sitharaman called upon Corporate India to quickly join to support the virtuous cycle of investment and growth and ensure that opportunity is not lost in taking the country to higher trajectory of industrialisation. She highlighted that the government was already focused on boosting spend on infrastructure and has in the recent budget enhanced its capital expenditure so as to pump prime the economy. 

MNREGA outlay

On MNREGA outlay for the next fiscal being lower than the revised estimate of 2021-22, Sitharaman said that the government was open to increasing the allocation if demand for the scheme were to go up during next year. She was responding to TAFE’s Chairperson and Managing Director Mallika Srinivasan suggestion that allocation for MNREGA should be maintained at the same level of revised estimate of 2021-22 given the huge buoyancy in taxes.  While lauding the budget, CII President T V Narendran said that inflation remains a key concern for industry and suggested that government must take efforts to include sovereign debt in global bond indices.  On privatisation of two public sector banks, Sitharaman said that she cannot give a timeline on this front, but noted that the Government is committed to taking forward the announced privatisations. She noted that her not talking about them in the latest budget did not mean that bank privatisation efforts have been dropped. 

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