Voices of Change 10: R Shankar, Independent Director
R Shankar is an Independent Director at Bharat Rohan. He is an accomplished Commercial Banker, Finance Professional, and C-suite management Advisor with almost three decades of diverse experience with leading International Banks, Technology companies, and Consulting Companies.
Our team spoke to him recently on corporate governance and independent directorship. Here are the excerpts from the interview:-
1 You have been a board member. How can independent directors improve corporate governance practices? Please share anecdotes/examples.
R Shankar: The answer to this squarely depends on the repository of the existing knowledge base combined with the skill sets of identifying and applying the same based on the ongoing scenarios being observed and encountered. A key element is to remain constantly engaged with the Board and its activities continuously and in doing so, be vigilant and quick to spot on any inconsistencies or gaps to pick opportunities for further improvements by flagging off potential risks and/or strengthening of existing practices being followed.
For example, in the areas of Related Party Transactions (RPT) which is a common scenario with traditional promoters running corporates in India, it is imperative that a hawk’s eye is kept on such transactions and there is always an arm’s length and best practices followed in terms of final decisions and approvals so that even if unavoidable in common business interests, the framework of governance is not flouted. Objectivity in decision-making is also a need of the hour. It is to be also ensured that a much higher standard of transparency is put in place and also in the public domain (especially in the case of listed companies) so that any kind of future inquiries or clarifications from regulators can be confidently addressed without the requirement of a damage control exercise after such situations.
In view of the above, all efforts must be directed towards enhanced corporate governance standards whose benchmark is larger than what the regulators have set and such proactive efforts alone could play a vital role in creating shareholder value and seamless continuity. This could be ensured by rational and objective analysis in line with established standards that are completely unbiased and neutral from all perspectives.
In a nutshell, being proactive is the best way forward rather than reactive. As they say, time and tide wait for no man!
2) You are a respected figure in corporate governance, especially finance & risk management (critical areas for boards). Please share your contributions as a senior leader/board member.
R Shankar: It has been my constant endeavour all along to proactively engage effectively in both the areas of finance and risk, to the best of my knowledge and belief and to the true sense of the term. I always keep reminding the Board members on an ongoing basis of any upcoming major decisions on the agenda that constant evaluation and monitoring is the best way forward for both financial and non-financial aspects of any decisions. In my opinion, both aspects are equally critical.
For example, if a financial risk poses a potential monetary loss, a non-financial risk involving a reputational loss is also an equally significant or in some scenarios a much larger impact on business continuity itself. Therefore, when it comes to risks, there is no way one can afford to remove the foot from the pedal lest the wheels stop moving. While it would be impractical to forecast the extent of losses beforehand, nevertheless all ongoing efforts must be necessarily directed towards continuous monitoring and vigilance on an ongoing basis.
In my almost 3 decades of diverse experience with leading International Banks, Technology, and Consulting Companies encompassing Assets, Liabilities, Operations, Technology, Audit, Compliance, Risk Management, Change Management, Finance, Administration, and Human Resources, I have developed key skills that include Business Operations, Technology Initiatives; Change/Run the Organization, Combining Processes, Systems and People for effective control and promoting superior customer experience. Consulting assignments on Financial Inclusion, Organizational Restructuring, Mergers & Acquisitions, and Integration have further honed these skills over the period.
Having said that, striking a well-balanced approach from an overall perspective in terms of oversight is indeed the preferred manner of ensuring flawless and seamless continuity as a going concern. As part of this thinking, I engage myself actively on not just the Board agenda alone but equally or perhaps even larger on the perspectives of the outcomes of decisions of the respective Board Committees as well with the understanding that the Committees are after all the offshoots of the Board and eventually converge into it.
3) How can overall board governance and board leadership be enhanced in the Indian corporate world?
R Shankar: While I would proudly state in the Indian context of how the parameters of both Board governance as well as Board leadership have grown by leaps and bounds over the past few decades or so, there do exist lots of potential opportunities to further bring in needed enhancements in line with evolving regulations and greater thrust on compliance practices. In other words, there is no room to afford a pause on continuous improvements to best practices.
One of the key areas that the promoter fraternity has well realized is that Thought Leadership is a vital element to Boards and this has been felt especially over the past few years primarily due to the passage of many key regulations thereby turning into statutes. For example, the passage of the Insolvency and Bankruptcy Code (IBC) in 2016 with the twin objectives of providing sick corporates with a vital formal roadmap of revival, recapitalization, and turnaround as also ensuring that the balance sheets of lenders are well protected, has been a path-breaking regulation. However, in practicality, the final outcomes of such proceedings are yet to be fully harnessed due to several hurdles witnessed in the roadmap for revival and which however are continuously evolving towards maturity.
Few areas that require special focus and attention would be the areas of conflict of interest and whistleblowing. In both these areas, there are high possibilities of noticing or receiving false alerts from external sources with some vested interests and/or driven with ulterior motives and hence it is extremely important to properly analyse and deliver objectively with the guiding themes of neutrality and rationalism.
It is globally proven that thought leaders alone bring in the necessary strategies as well as maturity to the Boards and they are typically the highly well-bred and well-read professionals with brilliant track-record of academics, scientific thinking and broad exposure to public life having encountered differentiated scenarios and aligned thinking. In line with this, Corporates are vying with each other to onboard some of the best thought leaders that they could think of so that they get immensely benefited as narrated above.
