NEW DELHI: In what is being seen as a move to protect the Indian corporates from criticism on the global arena, the government has said it would not allow either the World Bank or the Organisation for Economic Cooperation and Development (OECD) to rate corporate governance of Indian companies on the parameters set by them.
The norms adopted by these international bodies are best suited to the developed countries and not for countries like India which are still catching up with such practises, the government has argued.
If the World Bank is allowed to rate the Indian corporate about corporate governance, industry representatives feel, it would have dented the image of companies like IOC, Gail, Bhel, NTPC and a number of private players.
“We have told the World Bank and the OECD team that they would be allowed to rate the Indian enterprises for their implementation of corporate governance practises only if the world bodies would take the parameters set by the Government of India for the rating purpose,” a ministry of heavy industries and public enterprises official said.
The protective step has been taken by the government despite the fact that stock market regulator SEBI has made it mandatory for all the listed companies to have 50% of the board members as independent directors with an aim to ensure effective corporate governance practises. The government, however, has mandated that all the central public sector enterprises (CPSEs) should fill at least 33% of their board seats with Independent directors.
Industry observers feel the governments move is aimed towards saving the face of India’s top-notch companies like IOC, ONGC and Gail among others that are short on many parameters of corporate governance –– not on those set by SEBI or the World Bank but even on those set by the department of public enterprises (DPE).
The government has, however, started taking the matter seriously and even pointed out that the navratna and mini-ratna status of the CPSEs can be taken away if they do not adhere to the set norms. This would result in the companies losing lots of financial and administrative powers and more government interference in their decision making.
It is also set to make the prescribed norms for corporate governance mandatory for all the CPSEs from next fiscal. SEBI has recently found over half a dozen listed CPSEs (out of the total 41) violating the corporate governance norms. The situation for the private sector and the unlisted companies are much worse.
The norms adopted by these international bodies are best suited to the developed countries and not for countries like India which are still catching up with such practises, the government has argued.
If the World Bank is allowed to rate the Indian corporate about corporate governance, industry representatives feel, it would have dented the image of companies like IOC, Gail, Bhel, NTPC and a number of private players.
“We have told the World Bank and the OECD team that they would be allowed to rate the Indian enterprises for their implementation of corporate governance practises only if the world bodies would take the parameters set by the Government of India for the rating purpose,” a ministry of heavy industries and public enterprises official said.
The protective step has been taken by the government despite the fact that stock market regulator SEBI has made it mandatory for all the listed companies to have 50% of the board members as independent directors with an aim to ensure effective corporate governance practises. The government, however, has mandated that all the central public sector enterprises (CPSEs) should fill at least 33% of their board seats with Independent directors.
Industry observers feel the governments move is aimed towards saving the face of India’s top-notch companies like IOC, ONGC and Gail among others that are short on many parameters of corporate governance –– not on those set by SEBI or the World Bank but even on those set by the department of public enterprises (DPE).
The government has, however, started taking the matter seriously and even pointed out that the navratna and mini-ratna status of the CPSEs can be taken away if they do not adhere to the set norms. This would result in the companies losing lots of financial and administrative powers and more government interference in their decision making.
It is also set to make the prescribed norms for corporate governance mandatory for all the CPSEs from next fiscal. SEBI has recently found over half a dozen listed CPSEs (out of the total 41) violating the corporate governance norms. The situation for the private sector and the unlisted companies are much worse.
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