Engine of country’s growth, capital markets must be nurtured: Uday Kotak

Terming capital markets as the engine of the country’s growth, veteran banker and CII President Uday Kotak, on Tuesday, said that policymakers need to keep in mind that this engine needs to be nurtured and sustained.

“The most defining aspect of the economy in the last one year was the way the capital markets stood by and supported the economy. We saw probably among the highest level of fund raise, active and functioning capital market, and the regulator SEBI and Ministry of Corporate Affairs were on their toes to do what is right for markets and its functioning and ensuring a delicate balance between the interest of issuers and investors,” he said at a CII Corporate Governance Summit.

Kotak, who is Managing Director and CEO, Kotak Mahindra Bank, further said: “It is here that we have had actually great support to our economy at a time of a crisis probably once in a 100 years.”

Those who had access to capitalwere able to navigate and survive the turbulent time, Kotak noted.

Access to capital

To have access to capital, corporate India must see continuous improvement in governance standards, he said, stressing that the success and failure of enterprise are now being determined by this very important point of corporate governance.

Addressing the event, Keki Mistry, Vice-Chairman and CEO, Housing Development Finance Corporation, said investors use corporate governance as an indicator to judge the quality of a company’s management and the effectiveness of its board.

“It is now widely accepted by companies that sound principles of corporate governance are now necessary for their long term sustainability,” he said, adding that it is one of the focus areas of global investors when they make investments.

Governance trends

Outlining six key corporate governance trends, which have found traction in India in recent times, Mistry said independent directors should be adequately compensated for the additional time they spend in carrying out their duties through means such as stock options, apart from cash consideration.

“There should be no regulatory and legal bar in providing stock options to independent directors, in addition to cash compensation so long as the combination falls within the remuneration limit prescribed under the Companies Act,” he said, adding that the Ministry of Corporate Affairs and SEBI may consider this.

The six trends he listed on corporate governance include risk management, role of independent directors, reshaping of the board, shareholder activism, and whistle-blower policy.