POLICY ON CODE OF CONDUCT FOR THE BANK’S BOARD OF DIRECTORS AND SENIOR MANAGEMENT
I. NEED AND OBJECTIVE OF THE CODE:
Pursuant to Regulation 17(5)(a) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, every listed entity requires to lay down a Code of Conduct for Directors on the Board of an entity and its Senior Management as part of Corporate Governance.
“Senior Management” shall mean the officers and personnel of the listed entity who are members of its core management team, excluding the Board of Directors, and shall also comprise all the members of the management one level below the Chief Executive Officer or Managing Director or Whole Time Director or Manager (including Chief Executive Officer and Manager, in case they are not part of the Board of Directors) and shall specifically include the functional heads, by whatever name called and the Company Secretary and the Chief Financial Officer.
Accordingly, the Bank has laid down this Code for its Directors on the Board and its Core Management.
II. BANK’S BELIEF SYSTEM:
This Code of Conduct attempts to set forth the guiding principles on which the Bank shall operate and conduct its daily business with its multitudinous stakeholders, government and regulatory agencies, media, and anyone else with whom it is connected. It recognizes that the Bank is a trustee and custodian of public money and in order to fulfill its fiduciary obligations and responsibilities, it has to maintain and continue to enjoy the trust and confidence of public at large.
The Bank acknowledges the need to uphold the integrity of every transaction it enters into and believes that honesty and integrity in its internal conduct would be judged by its external behavior. The Bank shall be committed in all its actions to the interest of the countries in which it operates. The Bank is conscious of the reputation it carries amongst its customers and public at large and shall endeavor to do all it can to sustain and improve upon the same in its discharge of obligations. The Bank shall continue to initiate policies, which are customer centric and which promote financial prudence.
III. PHILOSOPHY OF THE CODE:
The Code envisages and expects -
- Adherence to the highest standards of honest and ethical conduct, including proper and ethical procedures in dealing with actual or apparent conflicts of interest between personal and professional relationships.
- Full, fair, accurate, sensible, timely and meaningful disclosures in the periodic reports required to be filed by the Bank with government and regulatory agencies.
- Compliance with applicable laws, rules and regulations.
- To address misuse or misapplication of the Bank’s assets and resources.
- The highest level of confidentiality and fair dealing within and outside the Bank.
A. GENERAL STANDARDS OF CONDUCT:
The Bank expects all Directors and members of the Core Management to exercise good judgment, to ensure the interests, safety and welfare of customers, employees, and other stakeholders and to maintain a cooperative, efficient, positive, harmonious and productive work environment and business organization. The Directors and members of the Core Management while discharging duties of their office must act honestly and with due diligence. They are expected to act with the extent of utmost care and prudence, which an ordinary person is expected to take in his/her own business. These standards need to be applied while working in the premises of the Bank, at offsite locations where the business is being conducted whether in India or abroad, at Bank-sponsored business and social events, or at any other place where they act as representatives of the Bank.
B. CONFLICT OF INTEREST:
A “conflict of interest” occurs when personal interest of any member of the Board of Directors and of the Core Management interferes or appears to interfere in any way with the interests of the Bank. Every member of the Board of Directors and Core Management has a responsibility to the Bank, its stakeholders and to each other. Although this duty does not prevent them from engaging in personal transactions and investments, it does demand that they avoid situations where a conflict of interest might occur or appear to occur. They are expected to perform their duties in a way that they do not conflict with the Bank’s interest such as:
- Employment / Outside Employment - The members of the Core Management are expected to devote their total attention to the business interests of the Bank. They are prohibited from engaging in any activity that interferes with their performance or responsibilities to the Bank or otherwise is in conflict with or prejudicial to the Bank.
- Business Interests - If any member of the Board of Directors and Senior Management considers investing in securities issued by the Bank’s customer, supplier or competitor, they should ensure that these investments do not compromise their responsibilities to the Bank. Many factors including the size and nature of the investment; their ability to influence the Bank’s decisions; their access to confidential information of the Bank, or of the other entity, and the nature of the relationship between the Bank and the customer, supplier or competitor should be considered in determining whether a conflict exists. Additionally, they should disclose to the Bank any interest that they have which may conflict with the business of the Bank.
- Related Parties – The Directors of the Bank and Senior Management must comply with policy formulated on materiality of related party transactions and on dealing with Related Party Transactions. As a general rule, the Directors and members of the Senior Management should avoid conducting Bank’s business with a relative or any other person or any firm, Company or Association in which the relative or other person is associated in any significant role.
- Relative with reference to any person, means anyone who is related to another, if—
A person shall be deemed to be the relative of another, if he or she is related to another in the following manner, namely:-
- they are members of a Hindu Undivided Family;
- they are husband and wife; or
A person shall be deemed to be the relative of another, if he or she is related to another in the following manner, namely:-
- Father includes Step Father
- Mother includes Step Mother
- Son include Step Son
- Son’s wife
- Daughter include step daughter
- Daughter’s Husband
- Brother includes Step Brother
- Sister includes Step Sister
- If such a related party transaction is unavoidable, they must fully disclose the nature of the related party transaction to the appropriate authority. Any dealings with a related party must be conducted in such a way that no preferential treatment is given to that party.
- In the case of any other transaction or situation giving rise to conflicts of interests, the appropriate authority should after due deliberations decide on its impact.
C. APPLICABLE LAWS:
The Directors of the Bank and Senior Management must comply with applicable laws, regulations, rules and regulatory orders. They should report any inadvertent non-compliance, if detected subsequently, to the concerned authorities.
D. DISCLOSURE STANDARDS:
The Bank shall make full, fair, accurate, timely and meaningful disclosures in the periodic reports required to be filed with Government and Regulatory agencies. The members of Senior Management of the Bank shall initiate all actions deemed necessary for proper dissemination of relevant information to the Board of Directors, Auditors and other Statutory Agencies, as may be required by applicable laws, rules and regulations.
E. USE OF BANK’S ASSETS AND RESOURCES:
Each member of the Board of Directors and the Senior Management has a duty to the Bank to advance its legitimate interests while dealing with the Bank’s assets and resources. Members of the Board of Directors and Senior Management are prohibited from:
- using corporate property, information or position for personal gain;
- soliciting, demanding, accepting or agreeing to accept anything of value from any person while dealing with the Bank’s assets and resources;
- acting on behalf of the Bank in any transaction in which they or any of their relative(s) have a significant direct or indirect interest.
F. PROHIBITION OF TRADING ON INSIDER INFORMATION:
The Board of Directors and Senior Management of the Bank shall follow code of conduct for prohibition of Insider Trading adopted by Bank
G. CONFIDENTIALITY AND FAIR DEALINGS:
- Bank’s Confidential Information
- The Bank's confidential information is a valuable asset. It includes all trade related information, trade secrets, confidential and privileged information, customer information, employee related information, strategies, administration, research in connection with the Bank and commercial, legal, scientific, technical data that are either provided to or made available to each member of the Board of Directors and the Senior Management by the Bank either in paper form or electronic media to facilitate their work or that they are able to know or obtain access by virtue of their position with the Bank. All confidential information must be used for Bank’s business purposes only.
- This responsibility includes the safeguarding, securing and proper disposal of confidential information in accordance with the Bank's policy on maintaining and managing records. This obligation extends to confidential information of third parties, which the Bank has rightfully received under non-disclosure agreements.
- To further the Bank’s business, confidential information may have to be disclosed to potential business partners. Such disclosure should be made after considering its potential benefits and risks. Care should be taken to divulge the most sensitive information, only after the said potential business partner has signed a confidentiality agreement with the Bank.
- Any publication or publicly made statement that might be perceived or construed as attributable to the Bank, made outside the scope of any appropriate authority in the Bank, should include a disclaimer that the publication or statement represents the views of the specific author and not the bank.
- Other Confidential Information
The Bank has many kinds of business relationships with many companies and individuals. Sometimes, they will volunteer confidential information about their products or business plans to induce the Bank to enter into a business relationship. At other times, the Bank may request that a third party provide confidential information to permit the Bank to evaluate a potential business relationship with that party. Therefore, special care must be taken by the Board of Directors and members of the Senior Management to handle the confidential information of others responsibly. Such confidential information should be handled in accordance with the agreements with such third parties.
- The Bank requires that every Director and the member of Senior Management should be fully compliant with the laws, statutes, rules and regulations that have the objective of preventing unlawful gains of any nature whatsoever.
- Directors and the members of Senior Management shall not accept any offer, payment promise to pay, or authorization to pay any money, gift, or anything of value from customers, suppliers, shareholders/stakeholders, etc. that is perceived as intended, directly or indirectly, to influence any business decision, any act or failure to act, any commission of fraud, or opportunity for the commission of any fraud.
IV. GOOD CORPORATE GOVERNANCE PRACTICES:
Each member of the Board of Directors of the Bank should adhere to the following so as to ensure compliance with good Corporate Governance practices.
(a) Dos
- Study the Board papers thoroughly and enquire about follow-up reports on definite time schedule.
- Involve actively in the matter of formulation of general policies.
- Be familiar with the broad objectives of the Bank and the policies laid down by the Government and the various laws and legislations.
- Ensure confidentiality of the Bank’s agenda papers, discussions at the Board/Committee Meetings, notes and Minutes and ensure compliance with Secretarial Standard -1 (SS -1) issued by ICSI.
- Undertake appropriate induction and regularly update and refresh their skills, knowledge and familiarity with the Bank.
- Seek appropriate clarification or amplification of information and, where necessary, take and follow appropriate professional advice and opinion of outside experts at the expense of the Bank
- Strive to attend all meetings of the Board of Directors and of the Board committees of which he is a member
- Participate constructively and actively in the committees of the Board in which they are chairpersons or members;
- Strive to attend the general meetings of the Bank;
- Where they have concerns about the running of the Bank or a proposed action, ensure that these are addressed by the Board and, to the extent that they are not resolved, insist that their concerns are recorded in the minutes of the Board meeting;
- Keep themselves well informed about the Bank and the external environment in which it operates;
- Not to unfairly obstruct the functioning of an otherwise proper Board or committee of the Board
- Pay sufficient attention and ensure that adequate deliberations are held before approving related party transactions and assure themselves that the same are in the interest of the Bank;
- Ascertain and ensure that the Bank has an adequate and functional vigil mechanism and to ensure that the interests of a person who uses such mechanism are not prejudicially affected on account of such use;
- Report concerns about unethical behaviour, actual or suspected fraud or violation of the Bank's code of conduct or ethics policy
- Acting within his authority, assist in protecting the legitimate interests of the Bank, shareholders and its employees;
(b) Dont's
- Do not interfere in the day-to-day functioning of the bank (This stipulation does not apply to Managing & Executive Directors and Core Management).
- Do not reveal any information relating to any constituent of the Bank to anyone.
- Do not display the logo/distinctive design of the Bank on their personal visiting cards/letter heads (This does not prevent the Managing Director and Chief Executive Officer, Executive Directors and Core Management from using their DO Letterheads).
- Do not sponsor any proposal relating to loans, investments, buildings or sites for Bank’s premises, enlistment or empanelment of contractors, architects, auditors, doctors, lawyers and other professionals etc.
- Do not do anything, which will interfere with and/or be subversive of maintenance of discipline, good conduct and integrity of the staff.
- Not disclose confidential information, including commercial secrets, technologies, advertising and sales promotion plans, unpublished price sensitive information, unless such disclosure is expressly approved by the Board or required by law.
(C) Duties of Independent Directors/Non-Official Directors:
- Besides “Dos” and “Don’ts” as mentioned above, the Independent Directors/Non-Official Directors shall —
- Act in good faith in order to further the objects enumerated in the preamble to the Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970/1980, viz., to meet progressively and serve better the needs of development of the economy in conformity with national policy and objectives, in the best interest of the Bank, its shareholders, its employees, the community and for the protection for environment;
- exercise her/his duties with due and reasonable care, skill and diligence, and shall exercise independent judgment;
- Not involve in situation in which she/he may have a direct or indirect interest that conflicts, or possibly may conflict, with the interest of the Bank;
- Not achieve or attempt to achieve any undue gain or advantage either to herself/himself or to her/his relatives, partners or associates;
- Not assign her/his office.
- Guidelines of the Professional Conduct :
The Independent Directors/Non-Official Directors shall:-- Commit herself/himself effectively to her/his responsibilities;
- Uphold ethical standards of integrity and probity;
- Act objectively and constructively while exercising her/his duties;
- Exercise her/his responsibilities in a bona fide manner in the interest of the bank;
- Devote sufficient time and attention to her/his professional obligations for informed and balanced decision-making;
- Not allow any extraneous considerations that will vitiate her/his exercise of objective and independent judgement in the paramount interest of the bank, while concurring in or dissenting from the collective judgement of the Board in its decision making;
- not abuse her/his position to the detriment of the bank or its shareholders or for the purpose of gaining direct or indirect Personal advantage or disadvantage for any associated person;
- Refrain from any action that would lead to loss of her/his independence
- Where circumstances arise which make the director lose her/his independence, the director must immediately inform the Board regarding the same;
- Assist the Bank in implementing best corporate governance practices.
- Role and Functions
Independent Directors/Non-Official Directors shall:-- Help in bringing independent judgement to bear on the Board's deliberations, especially on issues of strategy, performance, risk management, resources, key appointments and standards of conduct;
- Satisfy herself/himself on the integrity of financial information and that financial controls and systems of risk management are robust and defensible;
- Safeguard the interests of all stakeholders, particularly minority shareholders; and
- Balance the conflicting interest of stakeholders.
V. WAIVERS
Any waiver of any provision of this Code of Conduct for a member of the Bank’s Board of Directors or a member of the Senior Management must be approved in writing by the Board of Directors of the Bank.
The matters covered in this Code of Conduct are of the utmost importance to the Bank, its stakeholders and its business partners, and are essential to the Bank's ability to conduct its business in accordance with its value system.
Declaration
I have received and read the Bank's Code of Conduct for the Bank’s Board of Directors and Senior Management and agree to comply with the same.
Place:________Signature:________
Date:________Name:________
Designation:________