Page 121 - BFSI CHRONICLE 10 th Issue (2nd Annual Issue ) .indd

BFSI Chronicle, 2 Annual Issue, 10 Edition July 2022
nd
th
require accountability for the stewardship social goals and between individual and
of those resources. The aim is to align as common goals. The governance framework is
nearly as possible the interests of individuals, there to encourage the efficient use of resources
corporations, and society. The incentive to and equally to require accountability for the
corporations is to achieve their corporate aims stewardship of those resources. The aim is
and to attract investment. The incentive for to align as nearly as possible the interests of
nation states is to strengthen their economies individuals, corporations, and society. The
and discourage fraud and mismanagement. incentive to corporations is to achieve their
corporate aims and to attract investment.
According to the Kumar Mangalam Birla The incentive for States is to strengthen
Committee on Corporate Governance, the
their economies and discourage fraud and
fundamental objective of the corporate mismanagement.
governance is “the enhancement of
shareholder’s value keeping in view the It is an effective framework which is supposed
interest of other stakeholders.” The four pillars to focus on the quality and consistency and
of Corporate Governance are Accountability, proper division of responsibilities among
Fairness, Transparency and Independence. the different authorities, identification and
Corporate governance is about managers protection of shareholders’ rights with
fulfilling a fiduciary responsibility to increased disclosures and transparency while
the owners of their companies, which is ensuring mechanism to avoid conflict of
based on trust. interest, ensuring guidance on responsibility
of board, defining various functions and roles
Corporate governance is the combination of directors, creation of special committees,
of processes or laws by which businesses formation of independent risk and audit
are operated, regulated or controlled.
functions etc.
The term encompasses the internal and
external factors that affect the interest The erudite speaker pointed out about
of a company’s stakeholders, including the responsibilities of the board, basically
promoters, shareholders, customers, suppliers, the organizational culture and values. A
management, employees and public at large. fundamental component of good governance is
a culture of reinforcing appropriate norms for
The RBI discussion paper on Governance responsible and ethical behavior which includes
in Commercial Banks defines Corporate
risk culture. Indicators of risk culture can be
governance as a set of relationship between grouped as Tone at the top, Accountability,
a company’s management, its board, its Effective Communication and challenge with
shareholders as well as other stakeholders
proper incentive structure.
which provides the structure through which
objectives of a company are set, along with The requirement of a model code of conduct
the means of attaining those objectives and for employees making clear that employees
monitoring the performance. are expected to conduct themselves ethically,
perform their job with skill, exercise due
Quoting from the Cadbury Report, the speaker
care and diligence in addition to complying
stressed that the Corporate Governance is with laws, regulations and as well as internal
holding the balance between economic and
policies of the organization was also discussed.

The Institute Of Cost Accountants Of India

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