Clear as mud, no more...
Rules are not necessarily sacred, principles are.
- Franklin D. Roosevelt (1882-1945), U.S. president.
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 anywayor 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),
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
Prashant L Rao
Head of Editorial Operations