CORPORATE
GOVERNANCE-
VISHAKA VAMANJUR
ROLL.NO – 55
TYBBI.
1
INDEX
Sr.no Topic Page.no
1. Introduction. 4
2. Definitions . 5
3. Importance of corporate governance. 6
4. Principles of corporate governance. 8
5. YES Bank – Company Profile. 9
6. Business strategy. 11
7. Corporate finance service. 17
8. Balance sheet of YES Bank. 19
9. Corporate governance at YES BANK. 20
10. Conclusion. 22
11. Reference. 24
2
ACKNOWLEDGEMENT
I would like to thank the professor in charge Mr. Navin Punjabi for giving
this topic to me that gave me more information about corporate
governance .
3
CORPORATE GOVERNANCE
INTRODUCTION.
Corporate governance refers to the system by which corporations are
directed and controlled. The governance structure specifies the
distribution of rights and responsibilities among different participants in
the corporation (such as the board of directors, managers, shareholders,
creditors, auditors, regulators, and other stakeholders) and specifies the
rules and procedures for making decisions in corporate affairs.
Governance provides the structure through which corporations set and
pursue their objectives, while reflecting the context of the social,
regulatory and market environment. Governance is a mechanism for
monitoring the actions, policies and decisions of corporations.
Governance involves the alignment of interests among the stakeholders.
There has been renewed interest in the corporate governance practices of
modern corporations, particularly in relation to accountability, since the
high-profile collapses of a number of large corporations during 2001–
2002, most of which involved accounting fraud. Corporate scandals of
various forms have maintained public and political interest in the
regulation of corporate governance.
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OTHER DEFINITIONS
Corporate governance has also been defined as "a system of law and
sound approaches by which corporations are directed and controlled
focusing on the internal and external corporate structures with the
intention of monitoring the actions of management and directors and
thereby mitigating agency risks which may stem from the misdeeds of
corporate officers."
In contemporary business corporations, the main external stakeholder
groups are shareholders, debtholders, trade creditors, suppliers, customers
and communities affected by the corporation's activities. Internal
stakeholders are the board of directors, executives, and other employees.
Much of the contemporary interest in corporate governance is concerned
with mitigation of the conflicts of interests between stakeholders.Ways of
mitigating or preventing these conflicts of interests include the processes,
customs, policies, laws, and institutions which have an impact on the way
a company is controlled. An important theme of governance is the nature
and extent of corporate accountability.
A related but separate thread of discussions focuses on the impact of a
corporate governance system on economic efficiency, with a strong
emphasis on shareholders' welfare. In large firms where there is a
separation of ownership and management and no controlling shareholder,
the principal–agent issue arises between upper-management (the "agent")
which may have very different interests, and by definition considerably
more information, than shareholders (the "principals"). The danger arises
that rather than overseeing management on behalf of shareholders, the
board of directors may become insulated from shareholders and beholden
to management. This aspect is particularly present in contemporary public
debates and developments in regulatory policy.(see regulation and policy
regulation).
Economic analysis has resulted in a literature on the subject. One source
defines corporate governance as "the set of conditions that shapes the ex
post bargaining over the quasi-rents generated by a firm." The firm itself
is modelled as a governance structure acting through the mechanisms of
contract. Here corporate governance may include its relation to corporate
finance.
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IMPORATNCE OF CORPORATE GOVERNANCE
Changing Ownership Structure : In recent years, the
ownership structure of companies has changed a lot. Public
financial institutions, mutual funds, etc. are the single largest
shareholder in most of the large companies. So, they have
effective control on the management of the companies. They
force the management to use corporate governance. That is,
they put pressure on the management to become more efficient,
transparent, accountable, etc. The also ask the management to
make consumer-friendly policies, to protect all social groups
and to protect the environment. So, the changing ownership
structure has resulted in corporate governance.
Importance of Social Responsibility : Today, social
responsibility is given a lot of importance. The Board of
Directors have to protect the rights of the customers, employees,
shareholders, suppliers, local communities, etc. This is possible
only if they use corporate governance.
Growing Number of Scams : In recent years, many scams,
frauds and corrupt practices have taken place. Misuse and
misappropriation of public money are happening everyday in
India and worldwide. It is happening in the stock market, banks,
financial institutions, companies and government offices. In
order to avoid these scams and financial irregularities, many
companies have started corporate governance.
Indifference on the part of Shareholders : In general,
shareholders are inactive in the management of their companies.
They only attend the Annual general meeting. Postal ballot is
still absent in India. Proxies are not allowed to speak in the
meetings. Shareholders associations are not strong. Therefore,
directors misuse their power for their own benefits. So, there is
a need for corporate governance to protect all the stakeholders
of the company.
6
Globalisation : Today most big companies are selling their
goods in the global market. So, they have to attract foreign
investor and foreign customers. They also have to follow
foreign rules and regulations. All this requires corporate
governance. Without Corporate governance, it is impossible to
enter, survive and succeed the global market.
Takeovers and Mergers : Today, there are many takeovers and
mergers in the business world. Corporate governance is required
to protect the interest of all the parties during takeovers and
mergers.
SEBI : SEBI has made corporate governance compulsory for
certain companies. This is done to protect the interest of the
investors and other stakeholders.
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PRINCIPLES OF CORPORATE GOVERNANCE
Contemporary discussions of corporate governance tend to refer to
principles raised in three documents released since 1990: The Cadbury
Report (UK, 1992), the Principles of Corporate Governance (OECD,
1998 and 2004), the Sarbanes-Oxley Act of 2002 (US, 2002). The
Cadbury and OECD reports present general principles around which
businesses are expected to operate to assure proper governance. The
Sarbanes-Oxley Act, informally referred to as Sarbox or Sox, is an
attempt by the federal government in the United States to legislate several
of the principles recommended in the Cadbury and OECD reports.
Rights and equitable treatment of shareholders:Organizations should
respect the rights of shareholders and help shareholders to exercise those
rights. They can help shareholders exercise their rights by openly and
effectively communicating information and by encouraging shareholders
to participate in general meetings.
Interests of other stakeholders: Organizations should recognize that
they have legal, contractual, social, and market driven obligations to non-
shareholder stakeholders, including employees, investors, creditors,
suppliers, local communities, customers, and policy makers.
Role and responsibilities of the board: The board needs sufficient
relevant skills and understanding to review and challenge management
performance. It also needs adequate size and appropriate levels of
independence and commitment.
Integrity and ethical behavior: Integrity should be a fundamental
requirement in choosing corporate officers and board members.
Organizations should develop a code of conduct for their directors and
executives that promotes ethical and responsible decision making.
Disclosure and transparency: Organizations should clarify and make
publicly known the roles and responsibilities of board and management to
provide stakeholders with a level of accountability. They should also
implement procedures to independently verify and safeguard the integrity
of the company's financial reporting. Disclosure of material matters
concerning the organization should be timely and balanced to ensure that
all investors have access to clear, factual information.
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YES BANK – COMPANY PROFILE.
YES BANK is a private bank in India. It was founded by Ashok Kapur
and Rana Kapoor, with the duo holding a collective financial stake of
27.16%. Mr.Ashok Kapur was killed in a terrorist attack in 2008 in
Mumbai.
In 2010, the bank announced the roll-out of a strategic blueprint, named
Version 2.0 of the bank, to further accelerate its business growth in the
retail banking space, with the objective to achieve by 2015, a balance
sheet size of 1,500 billion, deposits of 1250 billion, advances of
1000 billion, a pan India network of 900 branches and a human capital
base of 12750 by 2015.
YES BANK deals in corporate investment services. This involves
providing, for a fee, financial advice to customers,[6] generally corporate
or individual investors.
YES BANK also competes in the South Asian commercial banking
market. Commercial banking is essentially the equivalent of retail
banking for commercial entities, but is however generally more expensive
and accounts yield less interest, since corporate firms don't generally
regard earning interest as a major component of their need for banking
services.
YES BANK, India's fourth largest private sector Bank is an outcome of
the professional entrepreneurship of its Founder, Rana Kapoor and his
highly competent top management team, to establish a high quality,
customer centric, service driven, private Indian Bank catering to the
“Future Businesses of India”. YES BANK is the only Greenfield license
awarded by the RBI in the last 17 years, associated with the finest
pedigree investors.
Since its inception in 2004, YES BANK has fructified into a ‘“Full
Service Commercial Bank” that has steadily built Corporate and
Institutional Banking, Financial Markets, Investment Banking, Corporate
Finance, Branch Banking, Business and Transaction Banking, and Wealth
Management business lines across the country, and is well equipped to
offer a range of products and services to corporate and retail customers.
YES BANK has adopted international best practices, the highest
standards of service quality and operational excellence, and offers
comprehensive banking and financial solutions to all its valued
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customers. Today, YES BANK has a widespread branch network of over
500 branches across 350 cities, with 1050+ ATMs and 2 National
Operating Centers in Mumbai and Gurgaon.
YES BANK has been recognized amongst the Top and Fastest Growing
Banks in various Indian Banking League Tables by prestigious media
houses and Global Advisory Firms, and has received several national and
international honours for our various Businesses including Corporate
Finance Investment Banking, Treasury, Transaction Banking, and
Sustainable practices through Responsible Banking. The Bank has
received numerous recognitions for its world-class IT infrastructure, and
payments solutions, as well as excellence in Human Capital.
The sustained growth of YES BANK is based on the key pillars of
Growth, Trust, Technology, Human Capital, Transparency & Responsible
Banking. As the Professionals’ Bank of India, YES BANK has
exemplified ‘creating and sharing value’ for all its stakeholders, and has
created a differentiated Banking Paradigm with the vision of ‘Building
the Best Quality Bank of the World in India’ by 2015.
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Business Strategy
Knowledge Banking: - One of the strengths and differentiating features of
Yes Bank is its knowledge banking approach that is the essence of all
offerings to its customers. Knowledge has been institutionalized as a key
ingredient in all internal and external processes and utilized to create
customized solutions for the clients’ specific requirements.
Technology and Operations: - As a new generation Bank, Yes Bank has
the advantage of accessing the latest available technology. The Bank has
taken a calibrated decision to invest in the best IT system and practices in
order to make its technology platform a strategic business tool for
building a competitive advantage.
Responsible Banking: -Yes Bank has a vision to champion ‘Responsible
Banking’ in India, where the concepts of Corporate Social Responsibility
(‘CSR’) and sustainability are integrated in its Business focus.
Business Lines: -Yes Bank has four distinct business segments to
effectively service the differentiated needs of its targeted customers.
Corporate and Institutional Banking (C&IB): -To cater to the needs of
large corporate & institutional clients, MNC’s, government companies
and PSU’s. Bank targets C&IB customers through its multifunctional
branches in the key metropolitican cities.
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Emerging Corporate Banking (ECB): -It is dedicated to partner with
growth-focused, fast-paced enterprises, which are emerging as a leader in
their respective business areas.
Business Banking: -To cater to the needs of the small and medium
enterprises (SME), Yes Bank has set up a dedicated business unit to focus
on delivering superior banking solutions specially designed to meet the
varying and dynamic needs of its SME clients.
Retail Banking and Wealth Management: -The Bank intends to develop
Retail Banking into a key value driver. Yes Bank offers its customers
choice & convenience, reflected in its branch layout & design, product
feature /design, options of distribution channels and superior technology
enabled service quality. Yes Bank predominantly offers value added retail
liability and third party wealth management products as well as retail
asset offerings through its sales and service network linked to its
branches.
12
Private Banking: - Yes Bank is focusing on personalized relationship
banking for its top end High Net worth customers, supported by
structured financial solutions tailor-made to suit the needs of such
customers.
Product lines: - Yes Bank offers a wide range of fee-based products to
corporate and business banking customers to ensure a high degree of
cross-sell to clients.
Financial Markets: -Yes Bank financial markets was ranked second in the
‘Best for currency strategy’ and ‘best for technical analysis’ categories at
the Asia Money 2005 foreign exchange poll for India.
Transaction Banking: -Yes Bank Transaction banking group has adopted
a consultative approach and focus on knowledge and relationship banking
to enable customers to address strategic financial and operating needs in
the domain of:
Working capital and liquidity management
Asset management
Treasury integration
Exposure and risk management
13
Yes Bank proposes to apply industry knowledge and superior technology
for offering innovative structured solutions integral to a company’s
financial supply chain.
Yes International Banking: - It offers a complete suite of international
banking products and services, driven by state-of-the art technology,
which includes Debt, Trade finance, corporate finance, Investment
banking and business advisory services, treasury and global Indian
banking. The Bank also plans to leverage its international presence, for its
capital raising activities. These services will initially be through
partnerships with international banks and financial institutions followed
by the establishments of branches and representative offices, as per
regulatory approvals.
Brand Creation: - The Bank believes that its differentiation begins with
its service and trust mark ’YES’. ‘YES’ represents the bank true spirit of
being service-oriented. The ‘YES’ brand creation effort is supported by
‘Triton Communications’, the principal advertising agency and ‘Ad
factors PR’, the Bank’s public relation consultant.
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Key Members of Yes Bank Management Team
NAME DESIGNATION
Mr. Rana Kapoor Managing Director & CEO
Mr. Sunil Gulati Group President - C&IB,
Transaction Banking
Mr. Deepak Gaddhyan Group President GRM Team.
Mr. Sumit Gupta Country Head – Emerging
Corporate Banking
Mr. Alok Gupta Country Head – life sciences &
technology
Mr. Rajnish Datta Country Head –Small business
banking group
Mr. Subir Bisht Chief Risk Officer
Mr. Sanjay Aggarwal Country Head –Credit Risk,
Business Banking
Mr. Varun Tuli President Business Banking
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Key Highlights & Milestones of Yes Bank.
Nov 2003 Incorporation of YES BANK
Limited
May 2004 RBI License to commence
banking business
Dec 2006 Ranked No.3 in the Business
World Survey of India’s Best
listed Banks
Mar 2007 Ranked No.2 among New Private
Sector Banks in the Financial
Express survey
Dec 2007 Won ‘Best CSR practice award
2007’
Dec 2007 Won ‘IT people award 2007’
Jan 2008 60 operational branches across
India
Mar 2008 Ranked No.3 among New Private
Sector Banks in the Financial
Express-E&Y survey & overall
#1 on credit quality & #2 on
Growth
Apr 2008 67 operational branches across
India
Corporate Finance Services
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Our Corporate Finance team offers our Corporate, Institutional Business
Banking clients a combination of advisory services and customized
structured products to meet their specialized requirements. We offer a
wide range of Corporate Finance solutions to the following categories of
clients:
1.Local Corporates
2.Multinational Companies
3.Financial Institutions
4.Public Sector Undertakings
We, at YES BANK, believe we have substantial "knowledge arbitrage",
which enables our clients to obtain superior financial returns in a risk
mitigated manner. Each member of our Corporate Finance team brings
with him a wealth of experience across transaction varieties and sectors,
and enjoys strong, established relationships with both corporates and
financial institutions.
Corporate Finance - Product and Service
Our range of products and services fall under the following three broad
categories:
Infrastructure Banking Unit (IBU):
This unit provides a full range of advisory and credit linked products to
clients with a special focus on the infrastructure sector. We meet the
financing needs of clients operating in the Power, Telecom, Mining, Oil
& Gas, Transportation and Wind Energy segments. We assist our clients
to obtain funding for projects and also offer end-to-end advisory services
from the planning stage to financial closure.
Structured & Project Finance Unit (SP&F):
The SP&F unit offers structured and project finance expertise to non-
infrastructure clients. The areas of specialization include:
a. Securitization- We provide solutions that offer companies access to
strategic sources of funding by converting assets with probable and
predictable cash flows into a source of capital. This alters the risk profile
of the corporate, provides the necessary liquidity and offers investors an
opportunity to gain higher yields while taking acceptable risks.
b. Structured Liability Products- The SP&F Group, in conjunction with
the Debt Capital Markets Group, offers liability products to a range of
financial and retail clients in packaging, structuring and placing ABS,
MBS, CLOs and CDOs to generate cost-efficient liabilities for our
clients.
c. Debt Syndication- We provide debt solutions from local and
international markets to both private and public sector institutions. Our
strong relations with Borrowers, other banks and Institutional investors
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help our clients to fulfill their desired financing requirements.
d. Leverage Finance- This encompasses the origination,
structuring,underwriting and participation through Funding in Leveraged
Finance transactions, including leveraged Buy-Outs, Take-overs and
General Acquisition Finance.
e. Asset & Tax based structures- Comprehensive solutions to provide
tax benefits, finance for physical assets and advisory services for leases.
Financial Restructuring Unit (FRU):
This Unit provides specialized advisory services on financial
restructuring, with expertise in the area of stressed assets. We offer our
clients expert advice and creative product solutions to overcome balance
sheet and financing constraints. The team also assists financially
distressed companies in the creation and implementation of
comprehensive financial restructuring packages.
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Balance Sheet of Yes Bank
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------------------- in Rs. Cr. -------------------
Mar '13 Mar '12 Mar '11 Mar '10
12 mths 12 mths 12 mths 12 mths 12 mths
Capital and Liabilities:
Total Share Capital 358.62 352.99 347.15 339.67
Equity Share Capital 358.62 352.99 347.15 339.67
Share Application Money 0 0 0 0
Preference Share Capital 0 0 0 0
Reserves 5,449.05 4,323.65 3,446.93 2,749.88
Revaluation Reserves 0 0 0 0
Net Worth 5,807.67 4,676.64 3,794.08 3,089.55
Deposits 66,955.59 49,151.71 45,938.93 26,798.57
Borrowings 20,922.15 14,156.49 6,690.91 4,749.08
Total Debt 87,877.74 63,308.20 52,629.84 31,547.65
Other Liabilities & Provisions 5,418.73 5,677.28 2,583.07 1,745.32
Total Liabilities 99,104.14 73,662.12 59,006.99 36,382.52
12 mths 12 mths 12 mths 12 mths 12 mths
Assets
Cash & Balances with RBI 3,338.76 2,332.54 3,076.02 1,995.31
Balance with Banks, Money at
Call 727 1,253.00 419.96 677.94
Advances 46,999.57 37,988.64 34,363.64 22,193.12
Investments 42,976.04 27,757.35 18,828.84 10,209.94
Gross Block 427.12 331.05 255.3 206.4
Accumulated Depreciation 208.67 161.98 125.78 92.32
Net Block 218.45 169.07 129.52 114.08
Capital Work In Progress 11.09 8.04 2.91 1.38
Other Assets 4,833.21 4,153.48 2,186.11 1,190.73
Total Assets 99,104.12 73,662.12 59,007.00 36,382.50
1,50,977.7 1,28,259.9 1,01,835.5
Contingent Liabilities 2,35,809.04 0 9 0
Bills for collection 12,672.71 10,851.42 8,135.54 4,105.86
Book Value (Rs) 161.94 132.49 109.29 90.96
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Corporate Government at YES BANK
As the fourth largest private sector Bank, YES BANK is establishing the
highest standards of Corporate Governance across the organisation. With
an excellent Board of Directors and the institution of all recommended
sub committees, the Bank is compliant with all the necessary statutory
requirements.
YES BANK is ordained to set the highest standards of Corporate
Governance right from its inception benchmarked with the best class
practices across the globe. Effective Corporate Governance is the
manifestation of professional beliefs and values, which configures the
organizational values, credo and actions of its employees. Transparency
and accountability are the fundamental principles to sound Corporate
Governance, which ensure that the organization is managed and
monitored in a responsible manner for 'creating and sharing value'.
YES BANK believes that there is a need to view Corporate Governance
as more than just regulatory requirements as there exists a fundamental
link with the organization of business, corporate responsibility and
shareholder wealth maximization.
Therefore, YES BANK is articulating a multi-stakeholder model
(including shareholder value) of accountability that will manage the
symbolic relationship between the various stakeholders. This approach
will be central to the day-to-day functioning of the Bank and in
implementation of its business strategy.
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Corporate Governance Initiatives at YES BANK
The Composition of the Board of Directors of YES BANK is in
compliance with the Banking Regulation Act, all RBI
guidelines (including the Ganguly Committee
recommendations), Companies Act, Listing Agreement with the
stock Exchange (s) and in accordance with best practices in
Corporate Governance
In compliance with the requirements of the Companies Act,
1956, Banking Regulation Act, RBI guidelines, Listing
Agreement with the stock exchange(s), 7 Board level sub-
committees have been set up to ensure effective functioning of
the Board.
The Bank has implemented a Code of Conduct and Ethics for
the Board of Directors and Senior Management.
YES BANK has instituted a comprehensive code of conduct for
prevention of insider trading in accordance with the
requirements of SEBI (Prohibition of Insider Trading)
Regulations, 1992
The Bank has formulated a Whistle Blower Policy in line with
the best international governance practices
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CONCLUSION
Corporate governance philosophies differ around the world. However,
with a few relatively minor exceptions, there exists a broad consensus on
the elements of good corporate governance. It is widely understood that
the most effective aspects of good corporate governance include:
• a strong board of directors, independent of management and with
sufficient expertise to oversee corporate management on behalf of the
company’s shareholders;
• management compensation oversight, such as a compensation
committee comprised of independent directors, to prevent opportunistic
behaviour by management and help link management compensation to
corporate performance;
• strong corporation laws and regulations designed to protect the rights of
shareholders;
• extensive public disclosure requirements, including both financial and
non-financial reporting designed to give shareholders and potential
investors an accurate, timely and thorough picture of the company’s
performance and liabilities; and
• a robust independent audit function, with sufficiently thorough
procedures to confirm the accuracy of a public company’s financial
disclosure statements and overseen by a board committee comprised of
independent directors, or by some other mechanism independent of
management.
Furthermore, these aspects of good corporate governance must be made
credible by strong government and private-sector enforcement
mechanisms. Government regulators and law enforcement agencies must
have the resources and legal authority to conduct thorough investigations
of potential wrongdoing and self-dealing by corporate management. And
regulators and law enforcement agencies must aggressively investigate
and prosecute managerial and corporate wrongdoing on a constant,
ongoing basis, not just when a major scandal arises. Likewise, corporate
compliance officers must have the powers they need to ensure that all
corporate employees (including senior management) comply with the law
and abide by the company’s internal corporate governance requirements.
Other corporate governance ‘gatekeepers’ – such as lawyers and outside
auditors – must be bound by a strong code of ethics and abide by the laws
and professional requirements which apply to their profession. Without
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such aggressive overlapping enforcement mechanisms, even the best
corporate governance standards can be undermined.
Despite the consensus, there remain differences in the degree of
implementation, and until all markets converge their requirements on the
highest quality corporate governance standards, investors will express
different degrees of confidence in different markets, and markets and
issuers demonstrating the highest standards will continue to attract
investors on the most favourable terms. In short, the best public
companies will continue to view strong corporate governance as an
investment well worth making.
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