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Issue of March 2005 

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Clear as mud, no more...

Rules are not necessarily sacred, principles are.
- Franklin D. Roosevelt (1882-1945), U.S. president.

Indian regulatory authorities appear to agree with Franklin D. Roosevelt. That's probably why Indian industry is guided by a plethora of principles and guidelines but there are very few actual regulations in force. Take Indian banks; the RBI rarely says that a bank must do something. It issues guidelines that banks fall in line with anyway—or they face the music when things go wrong.

Why are regulations necessary? On the face of it, one could argue that these are outmoded strictures in a world where capitalism has conquered the final frontier. The truth is that they are anything but redundant in the brave new world of the 21st century. We have never needed regulations more as is evinced by the spectacular case of Enron going belly up. Or take Worldcom. Then there's the case of former Tyco International chief L. Dennis Kozlowski who was perhaps the embodiment of what can go wrong when regulations are not strong enough or aren't adhered to. He is on trial in the New York State Supreme Court, facing charges of grand larceny and securities fraud. Over and above this, he is being tried for crimes in connection with giant bonuses and other compensation that he received while working as Tyco's top executive.

Cases like this resulted in SOX being drafted and companies in the United States scrambling to comply with them. In India, stock market scandals have resulted in SEBI cracking the whip. The RBI had to step in when GTB got itself into a financial mess. All these incidents serve to underscore the vital role that regulations play in ensuring a level playing field that is free of fraud and ensures transparent business operations. Here's a quote from André Breton that fits the Indian scenario rather well.

“No rules exist, and examples are simply life-savers answering the appeals of rules making vain attempts to exist.” - André Breton (1896-1966), French Surrealist.

Without further ado let me leave you in the hands of our writers who have put together three features that cover the issue of regulatory compliance and how IT can help the Indian CIO in this endeavour. Deepali Gupta looks at the domestic scene and she finds that regulations in India are hard to come by although guidelines are aplenty. Anil Patrick R writes that BPO companies are following international regulations to keep their MNC clients happy. Finally, Soutiman Das Gupta has the lowdown on how technology can be used to put together a compliance strategy that works.

Prashant L Rao
Head of Editorial Operations

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