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Reserve Bank of India (RBI) publication dated June 11, 2020 on the basis of recommendations issued by Dr Ganguly Group Report, regarding role of Company Secretary in the Board of a Company which comes under Corporate Governance in Banks situated in India.
Requirement of CS & Secretarial Auditors for Indian Banks- Reserve Bank of India today released on its website a Discussion Paper on ‘Governance in Commercial Banks in India’ for public comments.
Following are some FAQ’s for Governance in Banks in India- Requirement of CS & Secretarial Auditors for Indian Banks
1. What is the Compliance requirement under above publication?
· All banks whether listed or not, shall have a whole time Company Secretary.
· Who is bound by the professional standards of a Company Secretary.
· The Company secretary shall report to the Chair of the Board.
2. What is meaning of Bank in above Compliance?
· Private sector banks including Small Finance Banks (SFBs), Payments Banks (PBs), wholly owned subsidiaries of foreign banks and foreign banks operating in India under branch model.
· State Bank of India, Nationalised Banks and Regional Rural Banks, except in so far as what is prescribed is not inconsistent with provisions of specific statutes applicable to them or in case where the major shareholder/promoter viz., Government of India retains its instructions.
3. What is meaning of Corporate Governance mentioned above and its requirement?
· Corporate Governance means a set of relationships between a company’s management, its board, its shareholders as well as other stakeholders which provides the structure through which objectives of a company are set, along with the means of attaining those objectives and monitoring performance
· It helps define the way authority as well as responsibility are allocated and how decisions are made.
4. What will be the duties of Company Secretary in above New Compliance?
· The management of the bank shall not be involved in performance assessment of the company secretary. The performance assessment of the company secretary shall be undertaken by the NRC based on the feedback provided by the Chair of the board.
· The company secretary shall work closely with the compliance function of the bank. However, there shall be a distinct separation of roles, duties and reporting lines.
· The role of the head of compliance function is specific to the role expected of the bank being an RBI regulated entity while the role of the company secretary is to be defined by the fact that a bank is also a company or body corporate.
· The company secretary must ensure that the management makes available the agenda items within the time frame stipulated by the board, its committees and the minutes of the meetings of the board as well as the committees of the board are recorded as per the professional standards required.
5. Is this new Compliance is in Contradiction with existing Compliance under companies Act, 2013 or SEBI Regulation?
No, this new Compliance is in addition of existing Compliance as mentioned in Companies Act, 2013 or SEBI Regulation or other governing statutes, regulations and licensing conditions applicable to banks and the most stringent shall be followed by the Banks.
6. What is new Compliance Requirement for Bank for Secretarial Audit?
· All Banks including those not listed and/ or operating as branches shall undertake Secretarial Audit in line with provisions of section 204 of the Companies Act, 2013.
· The scope of which shall include compliance to guidelines/directions emanating from this Discussion Paper.
· The Secretarial Audit report shall be made available to the ACB which shall have an oversight over compliance to various gaps reported by the audit.
7. When above Compliance will become applicable to Banks or is applicable for FY 2020-21?
As far as applicability of above Compliance as concerned, RBI has published above new discussion paper for the purpose of seeking comments and suggestions and RBI will receive suggestions and comments till July 15, 2020 by mail.
Hence it can be opined that it will become applicable on a future date after considering all suggestions and comments given by various Stakeholders and date of applicability of above requirement shall be decided on that basis.
Compiled by- Abhay Bansal, Company Secretary, New Delhi
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