Governance as a Core Institutional Value

In a recent op-ed published in the Business Standard, Ravi Duvvuru, a member of the Reserve Bank of India’s advisory group on regulation, argues that governance failures persist not because of weak rules, but because governance is treated as a compliance obligation rather than a core institutional value.

Duvvuru contends that no amount of regulation can substitute for genuine internalization of accountability. He points to specific structural weaknesses that hamper this internalization, including a shallow talent pool of qualified independent directors, inconsistent execution of board oversight practices, and limited market discipline from institutional investors.

He offered seven recommendations, including making governance central to how boards, regulators and investors assess performance; weighting governance more heavily in supervisory rating models; requiring that bank chairpersons have a demonstrable financial sector background; disclosing lapses promptly; rewarding good governance visibly; ensuring CEOs aspire to build institutions rather than merely deliver returns; and establishing clear protocols for communication between management and the board.

“Governance failures are rarely about the absence of rules — they are about the erosion of will,” he concludes. “Frameworks do not fail — people do. Until boards choose scrutiny over comfort and institutions value candour over convenience, such episodes will recur.”