“(Board) independence is not a label (it should be substantive); it is the ability to challenge. It is an attitude backed by time, information and courage. Independent directors must be able to question strategy, controls, financials and risks, and question the assumptions behind forecasts.
“…The role of the chairman, therefore, is to express quieter views and keep the challenges safe,” Swaminathan said in his remarks at the recent Gatekeepers of Governance Summit in Mumbai.
Referring to an anonymous supervisory survey of assurance heads, the deputy governor underlined that most reported strong board support, but almost half of the resources cited did not match the size and complexity of their bank.
It is essential to give security heads independence, status and adequate resources. Otherwise, security remains a jewel, he added.
Swaminathan emphasized that boards should own the results, not the paperwork. He noted that a diverse and independent board keeps an organization on track by overseeing compliance, risk, culture and ethics.
“Directors must exercise their duty of care and loyalty, and they must own the results. Directors must set risk appetite and results targets and require independent assurance – risk, compliance and internal audit – to test what matters and report findings, root causes and closure,” he said.
Large conglomerates
In the case of large conglomerates, Swaminathan says the risk does not stop at the boundaries of individual entities. Directors need to see the whole, not just the parts.
“Two steps help. First, shielding critical entities so that a local problem doesn’t become a group crisis. Second, enforcing strict related party policies. Such transactions may be legitimate, but they need transparency, fairness and arm’s-length terms.
“Good reasoning and good documentation are evidence of good thinking and a tool for future learning, not a bureaucratic burden,” he said.
The deputy governor noted that modern business is not fair. A listed company can be part of a conglomerate with banks, NBFCs, insurers, brokers, payment companies, tech subsidiaries, foreign arms and employees.
“The regulatory map is equally rich: corporate law and MCA, securities regulation and listing rules, sector regulators for banking, insurance, pension, competition law, insolvency, accounting and audit supervision, market conduct rules, data and cyber requirements, and multiple enforcement agencies.
“Add to that international obligations, exchanges, depositories, SROs and state-level authorities. In such a world, some overlap is inevitable. That’s not a bug. Overlaps can also act as a safety net, ensuring that if one audit misses an issue, another can catch it,” he said.
Swaminathan said the real problem:can arise from conflicting rules, duplication of compliance and uncoordinated enforcement that is avoidable. At the same time, new activities, new technologies and new business models can fall through the cracks.
“So yes, both gaps and overlaps exist. The regulators’ job is to work together, minimize harmful overlaps and close material gaps, without stifling innovation…,” he said.
Published on November 11, 2025
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