Professional Documents
Culture Documents
Ganguly Committee
(Lesson-10A: BECG)
Contents
This deals with:1. Constitution and Set Up of the Committees 2. Objectives of the Committee 3. Recommendations of the Committee: a. Board of Directors (Constitution, Composition, Independent/Non-Executive Directors, Commonality of Directors of Banks/NBFCs, Responsibilities, Training and Remuneration of Directors. b. Other Issues (Information Flow to/from the Board, Company Secretary, Committees of the Board, Disclosure & Transparency, and Review of Implementation)
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To produce a list of recommendations after review of the existing framework of Boards of Banks and FIs and benchmarking them with International Best practices (enunciated by Basel Committee on Banking Supervision) and other Committees to the extent applicable to Indian Environment.
B. Other Issues:
(i) Prohibition flowing from Sec.20 of B.R. Act, 1949: There is statutory prohibition under above act to restrict grant of loan to a company in which one or more of the directors of the bank are interested. But such restrictions are not there internationally if there are full disclosures by the interested directors and appropriate covenants are imposed by the banks. Committee recommends that we 8 may move towards that goal.
3. Recommendations of the Committee (contd) (iv) Committees of the board: a. Supervisory Committee: It will work on collective trust without diluting the overall responsibility of the Board and monitors the credit and investment exposures of Banks and reviews adequacy of risk management process, internal control systems and ensures compliance with statutory/regulatory framework. b. Audit Committee of the Board. It looks into accounting role and overall management audit and will have a Chairman (Need not be CA) and majority of independent/Non-EDs with one of the Eds as one of the members.
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(vi)
Disclosure and Transparency: The Committee recommends that the following disclosures be made by Banks to Boards at regular intervals:- (i) Progress made in risk management system, risk management policy and strategy followed by the Bank (ii) Exposure to related entities viz. details of lending to/investments in subsidiaries, the asset classification of such lendings / investments. (iii) Conformity with CG standards structure, various committees, etc. Review of Implementation: For the implementation of the recommendations of Ganguly Committee, the banks should be asked to come up with a strategy. Once the strategy is received from all Banks, progress of implementation could be reviewed after 12 months; there-after it could be reviewed half-yearly. *The End*
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