A multifunctional board is required due to a lot of regulatory changes: Arundhati Bhattacharya


MUMBAI: As the Indian regulatory environment gets stricter by the day, there is need to get the balance right with respect to the intersection of board and management for handling future changes Arundhati Bhattacharya, Chairman, State Bank of India said.

Most major banks and companies are scrambling to set up a core group or a task force of senior executives from across functions to help understand the impact on business as well as identify and mitigate risks.

“The role of the Board and Management and how they intersect is very important for organizations to future-proof themselves from regulatory and market changes. A cross-functional Board which is diversified in terms of experience, expertise, skills and gender is imperative for bringing in the outside view to the Board since it is not always perspective-sharing inside-out but outside-in which is more important,” said Bhattacharya who was talking at an exclusive session with captains of India Inc as part of the CII Governance Series 2016-17 organised by Confederation of Indian Industry (CII).

About 50-60% time of all support functions like tax, regulations and compliance is going in identifying and analysing change in requirement and updating the management say industry experts. As companies and banks face a maximum number of regulatory changes they have to comply within a year ever, from GAAR (General Anti-Avoidance Rule) to GST (Goods and Services Tax) and audit rotation to Ind-AS (Indian Accounting Standards), this core team can help companies preempt and analyse how one change may have an impact on the other and overall company strategy.

Deliberating on the multiplicity of regulators most organisations are subject to, she cited how many times unrelated global regulations could influence the domestic scenario given the impact on the overall eco-system. Granulating the need for tracking changes for Board strategy, she highlighted how the right inputs on even draft regulations could lessen the regulatory impact on organisations. She asserted the role of independent directors explaining how they provide vital perspective and genuine feedback on external perception of the organisation which can greatly help board strategy and function.

She added that internal inspection and audit for risk management is required along with prioritising compliance to regulations among primary functions is essential. Naming information technology as both the greatest enabler as well as the biggest challenge, she focused on cyber security and innovation as key functions going forward.


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