Regulators must apply same rules for public and private cos: Deepak Parekh

He said leniency is seen in various mandates like adhering to having required number of independent or women directors on board, and added that there is a "little less accountability" in public sector

Finance industry veteran Deepak Parekh on Wednesday said regulators are lenient on state-run companies, and there is a need to have a parity between public and private enterprises.

He said the leniency is seen in various mandates like adhering to having required number of independent directors or women directors on board, and added that there is a "little less accountability" in the public sector.

"Regulators are a bit lenient on public sector companies," Parekh said, speaking at the launch of the book "The Undercover Monk" here.

Parekh, who is the chairman of mortgage major HDFC which is presently seeking regulatory nods for merging with subsidiary HDFC Bank, added, "same rules should apply on governance and disclosure norms".

Parekh said sometimes, government nominee director's unavailability leads to cancellation of a meeting and recounted an experience while serving a state-run company's board.

Parekh said after reaching New Delhi, he was informed that the meeting was postponed as a director of the unnamed company, who was also a secretary in a government department, was not available.

He, however, added that things are improving on this front and the overall governance aspect is also much stronger than before in Indian listed companies.

At the same event, former SBI chairman O P Bhat said the government also understands the importance of stronger governance of companies it runs because of the premiums it can command in valuations.

He cited the case of IDBI Bank, saying proposals to sell the majority holding held by LIC is deferred everytime due to governance-related shortcomings which impact the valuations.

Parekh said independent directors are important people for any organisation, but added that he is not a votary of having a separate regulator to look after the independent directors.

He said we also need proxy advisors, but they need to go beyond the checkbox based approach where they give suggestions based on non-fulfilment of requirements without using their intelligence.

Parekh said recommendations are given to vote against proposals if a director is found to be over-age, sitting on over four boards or not attending meetings earlier.