2002 )
BACKGROUND - July 2002 Sarbans- Oxley Bill (SOX) was enacted in U.S. - DCA appointed a High Level Committee on 21Aug. 2002 under the chairmanship of Mr. Naresh Chandra - Term of reference of this committee are wide.

Disqualifications for Audit assignments a) Prohibition of any direct financial interest b) Prohibition of receiving any loan/guarantee c) Prohibition of personal relationships d) Prohibition of service or cooling off period e) Prohibition of undue dependence on an audit client .COMPANY RELATIONSHIP 1.RECOMMENDATIONS THE AUDITOR.

.List of Prohibited non-audit Services a) Accounting and book-keeping services b) Internal audit services c) Financial information systems design and implementation d) Actuarial services e) Broker. investment advisor f) Outsourced financial services g) Management functions h) Any form of staff requirement I) Valuation services.RECOMMENDATIONS 2. dealer.

No statutory rotation of audit firms but compulsory rotation of audit partners (as in SOX Act) 5.Management certification in the event of Auditor¶s replacement 8.Auditors disclosure of Contingent Liabilities 6.Auditors disclosure of Qualifications & consequent action 7.Independence standards for consulting and other Entitles that are affiliated to Audit Firms 4.RECOMMENDATIONS 3.Auditor¶s annual certification of independence .

Setting up of independent Quality Review Board (QRB) 12.RECOMMENDATIONS 9.Proposed disciplinary mechanism for Auditors .Appointment of Auditors 10.CEO and CFO certification of annual audited accounts AUDITING THE AUDITORS 11.

Additional disclosures to directors 19. 20.Defining an independent director 14.RECOMMENDATIONS INDEPENDENT DIRECTORS 13.Percentage of independent director 15.Minimum Board size of listed companies 16.Audit committee charter .Tele-conferencing and video conferencing 18.Disclosure of duration of Board/Committee meetings 17.Independent directors on Audit committees of listed cos.

SEBI and subordinate legislation 25.Corporate Serious Fraud Office (CSFO) 27.Changes in Company Law .Training of independent directors OTHER RECOMMENDATIONS 24.Exempting non executive directors from certain liabilities 23.Improving facilities in the DCA offices 26.Remuneration of independent director 22.RECOMMENDATIONS 21.

Random scrutiny of audited accounts .DCA¶s office 29.Research on corporate governance 30.Internal code of ethics .OTHER RECOMMENDATIONS 28.Miscellaneous .Audit firms .

Separate the office of chairman and managing director.Undertaking from every director for discharging their responsibilities to the best of their abilities.Sufficiently long tenures of whole time directors.RECOMMENDATIONS TRAINING OF DIRECTORS 9.Need based training programmes/seminars/workshops to acquaint the directors with the emerging developments/ challenges facing the banking sector. . 10. 12. 11.

SEC. 1949 14. should go away. should be increased and may include stock-options.Prohibition (Sec.R ACT.RECOMMENDATIONS REMUNERATION TO DIRECTORS 13.Existing level of remuneration is inadequate. PROHIBITION.20 of BR Act) on lending to companies in which a director is interested. . 20 OF B.

RECOMMENDATIONS INFORMATION FLOW TO/FROM THE BOARD 15.Reviews dealing with various performance areas to be put up to the Supervisory Committee of the Board and a summary of each review to the Board for scrutiny & action. and should also have a Compliance Officer reporting to the Secretary . COMPANY SECRETARY 17. 16.Qualified Company Secretary to be appointed in all banks.Minutes to be recorded in uniform & formalised manner.

a) Supervisory Committee b) Audit Committee c) Nomination Committee d) Shareholder¶s Redressal Committee e) Risk Management Committee DISCLOSURES AND TRANSPARENCY 19. b) Exposure to related entities c) Conformity with Corporate Governance standard .a) Progress made in putting in place a progressive risk management system.RECOMMENDATIONS COMMITTEES OF THE BOARD 18.

Banks to evolve a strategy for implementation of the recommended standard of Corporate Governance. Reviews after 12 months or 6 months as deemed appropriate. .RECOMMENDATIONS REVIEW OF IMPLEMENTATION 20.