Reserve Bank of India Deputy Governor Swaminathan J. on Friday called for sharper board-level accountability across financial institutions, urging directors to move beyond procedural fixes and embrace intent-driven governance. “Boards must own outcomes, not paperwork,” he said, emphasising that oversight must be anchored in substance, not structure.
Speaking at the 10th Annual Corporate Governance Summit, he said most organisations respond to governance questions by redrawing organisation charts, updating reporting lines, and revising committee charters. “These fixes help, but only to a point,” he said. “If we keep editing diagrams without analysing the root cause, we treat the symptoms and miss the cause.”
Swaminathan outlined five key practices for boards to adopt, starting with a shift in mindset. He stressed that directors must exercise their duty of care and loyalty by setting risk appetite, defining outcome goals, and demanding independent assurance on what matters.
He also underscored the need for genuine independence on boards. “Independence is not a label, it’s the ability to challenge — a posture backed by time, information and courage,” he said, citing an RBI survey that found many directors hesitant to voice dissent. “The chair’s role is to draw out quieter views and keep challengers safe.”
In large conglomerates, Swaminathan urged boards to “look through the group, not just the entity,” advocating for ring-fencing of critical entities and strict related-party policies. He also called for empowering control functions like risk, compliance, and internal audit with direct board access and adequate resources. “Weak lines of defence are a board failure, not a staffing glitch,” he warned.
On regulatory architecture, Swaminathan acknowledged the inevitability of overlaps and gaps but said the real challenge lies in “conflicting rules, duplicated compliance and uncoordinated enforcement.” He proposed three principles for regulators: balancing entity- and activity-based regulation, applying proportionality, and striving for outcome-based rules.
“Markets move faster than rules,” he said, adding that a periodic governance gap analysis helps organisations assess where their frameworks stand against industry best practices.