27 October, 2020

Awaiting The Fi Ascent To Dissent

The $100-million ITC fraud highlights the need for FIs to play watchdog and maintain shareholders’ democracy

Awaiting The Fi Ascent To Dissent
outlookindia.com
-0001-11-30T00:00:00+05:53

OFTEN accused of changing colours like a chameleon, depending on a promoter’s clout or the Government’s relations with a particular management, Indian financial institutions (FIs) are now suddenly being asked to play a more active and effective role in corporate governance. Some would say that’s a tall order. Others like Sir Adrian Cadbury, whose report on corporate governance is right now a must-read for Indian corporate leaders, think differently. "In general, society gets the company it deserves," Cadbury said in a recent interview. "Having taken part in debates in 21 countries on the forces of corporate governance, I’m convinced that the forces of large institutional investors will bring about this change." 

The immediate cause of the call to FIs to get their act together is, of course, the alleged $100-million FERA violation by ITC, more than one-third of whose board members are FI nominees. Finance Minister P. Chidambaram clearly spelt out the new role for FIs when he opened the country’s first securities depository in...

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