The Reserve Bank of India (RBI) has asked all listed banks to comply with the Securities and Exchange Board of India's (SEBI) guidelines on corporate governance.
Most of the recommendations for corporate governance requirements have been followed by banks according to the RBI.
According to the RBI, all listed banks may provide un-audited financial results on half yearly basis to their shareholders with summary of significant developments.
Banks currently provide only audited results to the shareholders. Also private and public banks, which are listed, may form committees under the chairmanship of a non-executive director to look into redressal of shareholders' complaints. This committee would be similar to what has been mandated for listed companies.
Sebi had constituted a committee on corporate governance and circulated the recommendations to all exchanges for implementation by listed entities as part of the listing agreement in February 2000. However, Sebi had at that time exempted body corporates such as public and private banks, financial institutions, insurance companies and those incorporated under separate statute. It has now suggested to the RBI to consider issuing appropriate guidelines to banks and institutions so as to ensure that all listed companies would have uniform standards of corporate governance.
RBI has also said that the audit committee of the board may look into the reasons for default in payment to depositors, debenture holders, shareholders (non-payment of dividends) and creditors, wherever there are any cases of defaults in payment.
However on the appointment and removal of external auditors, RBI said that the practice followed in banks is more stringent than that recommended by the Committee and hence will continue. Also fixation of audit fee and also approval of payment for any other services are already subject to the instructions of RBI.
As regards recommendation for obtaining a certificate from auditors regarding compliance of conditions of corporate governance, it may be stated that the compliance of banks with RBI instructions is already being verified by the statutory auditors. Therefore, a separate certificate from the auditors is not considered necessary.
