Voices of Change 3: Nandkumar Saravade, ex-IPS Officer Pioneering Cybersecurity Initiatives
Nandkumar Saravade is currently working as a Public Interest Director at Bombay Stock Exchange and is a Strategy Advisor & Independent Director. An MTech from IIT Bombay, he was an IPS officer for 21 years, before taking early retirement. He has worked with CBI, NASSCOM, ICICI and Citibank. He served as CEO, Reserve Bank Information Technology Pvt Ltd (ReBIT) for five years. He is a Co-Founder of Deep Strat and has also been the Board Chair at Protean InfoSec and Protean Account Aggregator Limited.
Our team spoke to him recently on corporate governance and independent directorship. Here are the excerpts from the interview:-
- You have been a board member / independent director with multiple companies. How can independent directors improve corporate governance practices? Please share anecdotes/examples if possible.
If India is to fulfill its destiny of becoming a developed nation by 2047, our economy has to grow at 8% or more. We should have many more companies in the Fortune Global 2000 club (from the current 69) and attract China-level FDI ($189 billion in 2022, compared to $26 billion for India last year). This can happen only on the back of well-functioning capital markets, and high standards of corporate governance. The institution of the Independent Director (ID) is a vital ingredient in raising the standards of corporate governance to exemplary levels.
As the SEBI-constituted Kotak Committee (2017) elaborated, well-governed companies across the world command a premium of up to 40%. Effective corporate governance mechanisms rest on capable and diverse boards, that have expertise in different complementary fields, independently exercising their judgment and oversight, guiding and supporting the management in vision development, resource mobilisation, efficient execution, and risk management.
The selection of an independent director is a delicate exercise. The familiarity quotient may operate when known people are nominated on boards by the management, with the motivation to ensure shared values and the comfort factor. However, this may lead to decisions being taken without due deliberations, and worse, group think coming into play.
For an independent director to be true to her mandate, it is important that the relations with other board members, including the executive directors, are professional and based on mutual respect. Adequate preparation for each board/committee meeting is essential, given the importance of strategy setting and compliance with the multifarious regulations. New IDs take time to get up to speed about the industry domain, the regulatory regime, and the company-specific priorities. However, that extra effort is an essential investment to contribute meaningfully to the ongoing success of the enterprise.
2) You are a respected figure in corporate governance, especially cybersecurity, risk management, and compliance (critical areas for boards). Please share your contributions as a senior leader/board member
Technology is the most powerful transformational force in today’s world. All economic activities are being powered by the rapid developments in digitisation, boosting of digital public infrastructure, and the use of modern tools, like AI/ML. It is famously said that software is eating the world. No enterprise can afford not to leverage technology, which in many cases is providing the differentiation essential for businesses to dominate the market. However, with the many benefits come some grave risks: cyber security, rapid obsolescence, expensive investments, talent attrition and so on. Managements and boards are spending increasing amounts of time in discussing technology and allocating resources for transformation and sustenance.
I have been fascinated by the interplay of the multiple facets of technology and have spent the last two decades in learning about cyber risk in particular and its effective management. I have performed various leadership roles in banking (ICICI/Citi), consulting (EY), and non-profit (NASSCOM/DSCI).
I also got the opportunity to set up a technology captive company for the Reserve Bank of India (2016–21). It was a startup phase — but in a government setting. It was very satisfying to evolve the vision and refine the mission to create a powerhouse of technology capabilities that have served India’s central bank well. This required innovating in the area of HR frameworks, ethos development, and team building.
For any company, a director who has technology chops can bring in a sharper focus on cyber security to ensure proper policy framework, preventive controls implementation, monitoring of the IT assets, and incident response preparedness. For enterprise risk management, implementing the right framework to identify and assess risks, devise controls and stress test them, and promote a risk-aware culture, has to be ensured.
3) How can overall board governance and board leadership be enhanced in the Indian corporate world?
I think we have made a lot of progress in improving the corporate governance in Indian companies, but much more needs to be done, given our national ambition. My suggestions in this regard are as follows.
- To improve corporate governance in India, boards should strengthen independence, diversity, accountability, and ethical practices. Ensuring a majority of independent directors on the board can enhance objectivity, reduce conflicts of interest, and provide better oversight of management. A transparent selection process for independent directors, based on qualifications and experience, is essential to ensure they can constructively challenge management decisions.
- Diversity on boards, particularly in terms of gender and expertise, also plays a critical role in improving decision-making. While laws now require at least one woman on the board, companies should push for broader diversity in backgrounds, geographies, and business domains. Additionally, board members should bring varied skills in areas such as finance, technology, and law to tackle complex issues effectively.
- Regular board evaluations, both internal and through third-party reviews, can help measure effectiveness and hold directors accountable for their roles in strategic decision-making and risk management. Boards must also prioritize leadership succession planning, ensuring continuity for key positions such as the CEO and board chairperson. Nurturing internal leaders and having clear criteria for leadership selection are key to smooth transitions.
- Risk management and compliance oversight are equally important, especially in today’s digital age. Boards should establish robust risk management frameworks that include financial, operational, and cybersecurity risks, while also ensuring regulatory compliance with laws like the Companies Act.
- Transparency in reporting, active engagement with stakeholders, and incorporating ESG (Environmental, Social, and Governance) concerns into governance practices are increasingly critical. Family-owned businesses should professionalize their boards by bringing in external expertise and formal governance structures. Finally, continuous education for directors, promoting an ethical culture, and implementing strong whistleblower mechanisms ensure boards remain effective and aligned with best practices.
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