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Good Governance - For who? By who? How well done? Will disgorgement of Rs 14+ crores help?
Jun 16, 2025
In this article, we discuss good governance of businesses. Especially, large businesses run by entities funded by scrips listed on Bharat’s bourses.
These entities must have a board of directors. They have statutory auditors to validate their accounting conclusions. They have secretarial auditors to confirm they operate within the 4 corners of the law. Their shareholders have proxy advisors. They have at least one government regulator – SEBI which regulates the activities of all listed entities to ensure sufficient information disclosure. If the entity provides banking or related financial services, they have another regulator – RBI. If it is an Insurance Company, the second regulator is IRDA. Their auditors are subject to the oversight of their own professional bodies. For statutory auditors, it is ICAI. For secretarial auditors, ICSI. Recently, the government has created NFRA to regulate the CA profession beyond its own self-regulatory mechanism. For new directors there is IICA.
One would think enough is being done to ensure good governance. Retail (or non-promoter) shareholders should be able to sleep easily and reap just returns (dividends when continuing to hold shares, and capital gains when they sell shares) from investments in scrips listed on bourses in Bharat.
The reality is vastly different.
It is much like the general standards of cleanliness we see in most of our localities. Passengers of Mercs or Audis or Beamers, routinely, blithely and completely carelessly draw down their noise-less windows and dump all manner of garbage on the streets they are driving through. They only add to the piles of garbage already present there. Municipal cleaners do function, but less effectively than desirable. Cleanliness is rare.
Or, like the traffic situation on our streets. Drivers of all ages, of either gender, or almost any level of education, even cops on odd occasions, calmly behave as if the signal system does not exist and ignore traffic rules by driving on whichever side of the road suits them, and even on footpaths.
Laws and agencies exist on paper. Implementation is almost an exception. A singular enforcer, when s/he tries to hold someone to the law, is taught the concept of estoppel. “When 90% of Janata is not following the law, why in heaven’s name is it required only of me – just because you’re not in the right mood today or unwilling to accept the gratification I am offering?”
Should it remain like this? Are we like that only? Are we doomed, like my Jaunpuri cabbie, to conclude, “Ghor kaljug hai saheb”? Indore is an exceptional example of success when a community decides to ensure cleanliness. SEBI’s PIT compliance enforcement is beginning to show results. In the IndusInd Bank case, SEBI has asked for disgorgement of more than Rs 19 cores from 5 individuals, although no penalties have been imposed. However, are Indore and this large disgorgement just exceptions?
Although, as we all know, civic sense, cleanliness & policing are clearly related to corporate governance and regulation thereof. Good things begin at home or in our own cars and our localities and then extend to our places of work. However, rather than get distracted by such civilizational mores, let’s stay in corporate board rooms. A much smaller arena and one that has arguably got a lot less people to speak about, and each one with possibly much larger responsibilities.
Let’s first look at IndusInd Bank. The next article explores the matter in some detail, based largely on newspaper reports. Later, we will look at GenSol Engineering.
Link for reference : https://www.linkedin.com/pulse/good-governance-who-how-well-done-disgorgement-rs-14-devdutta-modak-b6z6f
In this article, we discuss good governance of businesses. Especially, large businesses run by entities funded by scrips listed on Bharat’s bourses.
These entities must have a board of directors. They have statutory auditors to validate their accounting conclusions. They have secretarial auditors to confirm they operate within the 4 corners of the law. Their shareholders have proxy advisors. They have at least one government regulator – SEBI which regulates the activities of all listed entities to ensure sufficient information disclosure. If the entity provides banking or related financial services, they have another regulator – RBI. If it is an Insurance Company, the second regulator is IRDA. Their auditors are subject to the oversight of their own professional bodies. For statutory auditors, it is ICAI. For secretarial auditors, ICSI. Recently, the government has created NFRA to regulate the CA profession beyond its own self-regulatory mechanism. For new directors there is IICA.
One would think enough is being done to ensure good governance. Retail (or non-promoter) shareholders should be able to sleep easily and reap just returns (dividends when continuing to hold shares, and capital gains when they sell shares) from investments in scrips listed on bourses in Bharat.
The reality is vastly different.
It is much like the general standards of cleanliness we see in most of our localities. Passengers of Mercs or Audis or Beamers, routinely, blithely and completely carelessly draw down their noise-less windows and dump all manner of garbage on the streets they are driving through. They only add to the piles of garbage already present there. Municipal cleaners do function, but less effectively than desirable. Cleanliness is rare.
Or, like the traffic situation on our streets. Drivers of all ages, of either gender, or almost any level of education, even cops on odd occasions, calmly behave as if the signal system does not exist and ignore traffic rules by driving on whichever side of the road suits them, and even on footpaths.
Laws and agencies exist on paper. Implementation is almost an exception. A singular enforcer, when s/he tries to hold someone to the law, is taught the concept of estoppel. “When 90% of Janata is not following the law, why in heaven’s name is it required only of me – just because you’re not in the right mood today or unwilling to accept the gratification I am offering?”
Should it remain like this? Are we like that only? Are we doomed, like my Jaunpuri cabbie, to conclude, “Ghor kaljug hai saheb”? Indore is an exceptional example of success when a community decides to ensure cleanliness. SEBI’s PIT compliance enforcement is beginning to show results. In the IndusInd Bank case, SEBI has asked for disgorgement of more than Rs 19 cores from 5 individuals, although no penalties have been imposed. However, are Indore and this large disgorgement just exceptions?
Although, as we all know, civic sense, cleanliness & policing are clearly related to corporate governance and regulation thereof. Good things begin at home or in our own cars and our localities and then extend to our places of work. However, rather than get distracted by such civilizational mores, let’s stay in corporate board rooms. A much smaller arena and one that has arguably got a lot less people to speak about, and each one with possibly much larger responsibilities.
Let’s first look at IndusInd Bank. The next article explores the matter in some detail, based largely on newspaper reports. Later, we will look at GenSol Engineering.
Link for reference : https://www.linkedin.com/pulse/good-governance-who-how-well-done-disgorgement-rs-14-devdutta-modak-b6z6f
In this article, we discuss good governance of businesses. Especially, large businesses run by entities funded by scrips listed on Bharat’s bourses.
These entities must have a board of directors. They have statutory auditors to validate their accounting conclusions. They have secretarial auditors to confirm they operate within the 4 corners of the law. Their shareholders have proxy advisors. They have at least one government regulator – SEBI which regulates the activities of all listed entities to ensure sufficient information disclosure. If the entity provides banking or related financial services, they have another regulator – RBI. If it is an Insurance Company, the second regulator is IRDA. Their auditors are subject to the oversight of their own professional bodies. For statutory auditors, it is ICAI. For secretarial auditors, ICSI. Recently, the government has created NFRA to regulate the CA profession beyond its own self-regulatory mechanism. For new directors there is IICA.
One would think enough is being done to ensure good governance. Retail (or non-promoter) shareholders should be able to sleep easily and reap just returns (dividends when continuing to hold shares, and capital gains when they sell shares) from investments in scrips listed on bourses in Bharat.
The reality is vastly different.
It is much like the general standards of cleanliness we see in most of our localities. Passengers of Mercs or Audis or Beamers, routinely, blithely and completely carelessly draw down their noise-less windows and dump all manner of garbage on the streets they are driving through. They only add to the piles of garbage already present there. Municipal cleaners do function, but less effectively than desirable. Cleanliness is rare.
Or, like the traffic situation on our streets. Drivers of all ages, of either gender, or almost any level of education, even cops on odd occasions, calmly behave as if the signal system does not exist and ignore traffic rules by driving on whichever side of the road suits them, and even on footpaths.
Laws and agencies exist on paper. Implementation is almost an exception. A singular enforcer, when s/he tries to hold someone to the law, is taught the concept of estoppel. “When 90% of Janata is not following the law, why in heaven’s name is it required only of me – just because you’re not in the right mood today or unwilling to accept the gratification I am offering?”
Should it remain like this? Are we like that only? Are we doomed, like my Jaunpuri cabbie, to conclude, “Ghor kaljug hai saheb”? Indore is an exceptional example of success when a community decides to ensure cleanliness. SEBI’s PIT compliance enforcement is beginning to show results. In the IndusInd Bank case, SEBI has asked for disgorgement of more than Rs 19 cores from 5 individuals, although no penalties have been imposed. However, are Indore and this large disgorgement just exceptions?
Although, as we all know, civic sense, cleanliness & policing are clearly related to corporate governance and regulation thereof. Good things begin at home or in our own cars and our localities and then extend to our places of work. However, rather than get distracted by such civilizational mores, let’s stay in corporate board rooms. A much smaller arena and one that has arguably got a lot less people to speak about, and each one with possibly much larger responsibilities.
Let’s first look at IndusInd Bank. The next article explores the matter in some detail, based largely on newspaper reports. Later, we will look at GenSol Engineering.
Link for reference : https://www.linkedin.com/pulse/good-governance-who-how-well-done-disgorgement-rs-14-devdutta-modak-b6z6f
Devdutta Modak
