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Compliance of Corporate Governance by PSUs: Changing Scenario and Top Management Response
The days have gone when Corporate Governance in Public Sector Undertakings (PSUs) was considered merely as a regulatory obligation. The era of limited autonomy for boards for decision-making, more inclined towards social obligations rather than a commercial approach and government control has gone with the passage of time. It has now evolved as a strategic transformation for ensuring transparency in the system, accountability to maximum extent, sustainability, and creation of value.
Key Drivers of the Evolving Compliance Landscape:
With an enormous increase in PSUs going public, stricter SEBI LODR compliances, greater public awareness & scrutiny by the public, and above all, introduction of performance evaluation system for PSUs has made compliance more demanding than ever before.
The current compliance scenario cast both pressure of compliance and journey of transformation.
With the adoption of Environmental, Social, and Governance (ESG) principles and assurance for compliances with respect to Business Responsibility and Sustainability Reporting (BRSR) mandates with further assessment by CAG by way of performance audits, findings through different chapters, financial and special audits; ESG & BRSR requirements have gone beyond “Tick-box type compliance” to independent assurance
with a motto for transparency, best sustainable business practices and accountability.
The Dual Pressure and Paradigm Shift:
The current compliance scenario cast both pressure of compliance and journey of transformation. PSUs are facing stricter disclosure norms, digitisation with a motive for transparency, accountability and sustainability compliances on one hand and top management change in view from “Check box Exercise” to tool for augmenting credibility, Risk Management Matrix assurance, enhanced operational efficiency and to build stakeholders confidence on the other hand. While governance pressure cannot be ruled out, the real change in trend can be seen with the transformation in leadership mind-set.
PSUs must view governance not as an external imposition, but as an intrinsic strategic asset that drives organisational efficiency and stakeholder trust.
Now, the top management views the compliance ecosystem as an effective tool for:
• Zeroing for sustainable and ESG/BRSR driven growth of the company.
• Ecosystem for proactive risk management rather than reactive monitoring.
• Eye for value-driven governance rather than compliance-driven.
• More board accountability for decision-making rather than decisions controlled by the government.
PSU leaders increasingly recognise governance as a methodical tool for improving company effectiveness, winning investor confidence, managing risks effectively, and ensuring perpetual sustainability. The emerging governance ecosystem provides not only a bitter challenge but also enormous opportunities for PSUs to build their company credibility and enhance their contribution to India's economic development.
Conclusion:
It can be concluded that the future of governance in PSUs will not be governed merely by how effectively they abide by stiff regulations, but by how proactively top management embraces compliance as a catalyst for value creation, ethical leadership, and long-term economic growth.
Moving forward, PSUs must view governance not as an external imposition, but as an intrinsic strategic asset that drives organisational efficiency and stakeholder trust. By embedding robust ESG frameworks, fostering a culture of voluntary disclosure, and aligning board decisions with long-term commercial and societal value, public sector enterprises can set new benchmarks in corporate excellence and play a defining role in shaping a flourishing and resilient national economy.
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Kamal Nath Thakur
He is a Fellow Member of the Fellow member of Cost and Management Accountant (ICMAI) as well as The Institute of Company Secretaries of India (ICSI). He brings with him more than three decades of professional experience across diverse areas, including Internal Audit, Project Financing, Treasury, Corporate Governance and Internal Controls. He is presently associated with NTPC Limited, a Maharatna Public Sector Undertaking, where he is working in the Corporate Internal Audit Department. Prior to NTPC, he worked for Hindustan Copper Ltd, Paradeep Phosphates Ltd. and for NBFCs.
Owned by: Institute of Directors, India
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