CORPORATEGOVERNANCE-

VISHAKA VAMANJURROLL.NO – 55

TYBBI.

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INDEX

Sr.no Topic Page.no1. Introduction. 42. Definitions . 53. Importance of corporate governance. 64. Principles of corporate governance. 85. YES Bank – Company Profile. 96. Business strategy. 117. Corporate finance service. 178. Balance sheet of YES Bank. 199. Corporate governance at YES BANK. 2010. Conclusion. 22

11. Reference. 24

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ACKNOWLEDGEMENT

I would like to thank the professor in charge Mr. Navin Punjabi for giving this topic to me that gave me more information about corporate governance .

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CORPORATE GOVERNANCE

INTRODUCTION.

Corporate governance refers to the system by which corporations are directed and controlled. The governance structure specifies the distribution of rights and responsibilities among different participants in the corporation (such as the board of directors, managers, shareholders, creditors, auditors, regulators, and other stakeholders) and specifies the rules and procedures for making decisions in corporate affairs. Governance provides the structure through which corporations set and pursue their objectives, while reflecting the context of the social, regulatory and market environment. Governance is a mechanism for monitoring the actions, policies and decisions of corporations. Governance involves the alignment of interests among the stakeholders.

There has been renewed interest in the corporate governance practices of modern corporations, particularly in relation to accountability, since the high-profile collapses of a number of large corporations during 2001–2002, most of which involved accounting fraud. Corporate scandals of various forms have maintained public and political interest in the regulation of corporate governance.

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OTHER DEFINITIONS

Corporate governance has also been defined as "a system of law and sound approaches by which corporations are directed and controlled focusing on the internal and external corporate structures with the intention of monitoring the actions of management and directors and thereby mitigating agency risks which may stem from the misdeeds of corporate officers."

In contemporary business corporations, the main external stakeholder groups are shareholders, debtholders, trade creditors, suppliers, customers and communities affected by the corporation's activities. Internal stakeholders are the board of directors, executives, and other employees.

Much of the contemporary interest in corporate governance is concerned with mitigation of the conflicts of interests between stakeholders.Ways of mitigating or preventing these conflicts of interests include the processes, customs, policies, laws, and institutions which have an impact on the way a company is controlled. An important theme of governance is the nature and extent of corporate accountability.

A related but separate thread of discussions focuses on the impact of a corporate governance system on economic efficiency, with a strong emphasis on shareholders' welfare. In large firms where there is a separation of ownership and management and no controlling shareholder, the principal–agent issue arises between upper-management (the "agent") which may have very different interests, and by definition considerably more information, than shareholders (the "principals"). The danger arises that rather than overseeing management on behalf of shareholders, the board of directors may become insulated from shareholders and beholden to management. This aspect is particularly present in contemporary public debates and developments in regulatory policy.(see regulation and policy regulation).

Economic analysis has resulted in a literature on the subject. One source defines corporate governance as "the set of conditions that shapes the ex post bargaining over the quasi-rents generated by a firm." The firm itself is modelled as a governance structure acting through the mechanisms of contract. Here corporate governance may include its relation to corporate finance.

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IMPORATNCE OF CORPORATE GOVERNANCE

Changing Ownership Structure : In recent years, the ownership structure of companies has changed a lot. Public financial institutions, mutual funds, etc. are the single largest shareholder in most of the large companies. So, they have effective control on the management of the companies. They force the management to use corporate governance. That is, they put pressure on the management to become more efficient, transparent, accountable, etc. The also ask the management to make consumer-friendly policies, to protect all social groups and to protect the environment. So, the changing ownership structure has resulted in corporate governance.

Importance of Social Responsibility : Today, social responsibility is given a lot of importance. The Board of Directors have to protect the rights of the customers, employees, shareholders, suppliers, local communities, etc. This is possible only if they use corporate governance.

Growing Number of Scams : In recent years, many scams, frauds and corrupt practices have taken place. Misuse and misappropriation of public money are happening everyday in India and worldwide. It is happening in the stock market, banks, financial institutions, companies and government offices. In order to avoid these scams and financial irregularities, many companies have started corporate governance.

Indifference on the part of Shareholders : In general, shareholders are inactive in the management of their companies. They only attend the Annual general meeting. Postal ballot is still absent in India. Proxies are not allowed to speak in the meetings. Shareholders associations are not strong. Therefore, directors misuse their power for their own benefits. So, there is a need for corporate governance to protect all the stakeholders of the company.

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Globalisation : Today most big companies are selling their goods in the global market. So, they have to attract foreign investor and foreign customers. They also have to follow foreign rules and regulations. All this requires corporate governance. Without Corporate governance, it is impossible to enter, survive and succeed the global market.

Takeovers and Mergers : Today, there are many takeovers and mergers in the business world. Corporate governance is required to protect the interest of all the parties during takeovers and mergers.

SEBI : SEBI has made corporate governance compulsory for certain companies. This is done to protect the interest of the investors and other stakeholders.

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PRINCIPLES OF CORPORATE GOVERNANCE

Contemporary discussions of corporate governance tend to refer to principles raised in three documents released since 1990: The Cadbury Report (UK, 1992), the Principles of Corporate Governance (OECD, 1998 and 2004), the Sarbanes-Oxley Act of 2002 (US, 2002). The Cadbury and OECD reports present general principles around which businesses are expected to operate to assure proper governance. The Sarbanes-Oxley Act, informally referred to as Sarbox or Sox, is an attempt by the federal government in the United States to legislate several of the principles recommended in the Cadbury and OECD reports.

Rights and equitable treatment of shareholders:Organizations should respect the rights of shareholders and help shareholders to exercise those rights. They can help shareholders exercise their rights by openly and effectively communicating information and by encouraging shareholders to participate in general meetings.Interests of other stakeholders: Organizations should recognize that they have legal, contractual, social, and market driven obligations to non-shareholder stakeholders, including employees, investors, creditors, suppliers, local communities, customers, and policy makers.Role and responsibilities of the board: The board needs sufficient relevant skills and understanding to review and challenge management performance. It also needs adequate size and appropriate levels of independence and commitment.Integrity and ethical behavior: Integrity should be a fundamental requirement in choosing corporate officers and board members. Organizations should develop a code of conduct for their directors and executives that promotes ethical and responsible decision making.Disclosure and transparency: Organizations should clarify and make publicly known the roles and responsibilities of board and management to provide stakeholders with a level of accountability. They should also implement procedures to independently verify and safeguard the integrity of the company's financial reporting. Disclosure of material matters concerning the organization should be timely and balanced to ensure that all investors have access to clear, factual information.

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YES BANK – COMPANY PROFILE.

YES BANK is a private bank in India. It was founded by Ashok Kapur and Rana Kapoor, with the duo holding a collective financial stake of 27.16%. Mr.Ashok Kapur was killed in a terrorist attack in 2008 in Mumbai.

In 2010, the bank announced the roll-out of a strategic blueprint, named Version 2.0 of the bank, to further accelerate its business growth in the retail banking space, with the objective to achieve by 2015, a balance sheet size of 1,500 billion, deposits of 1250 billion, advances of 1000 billion, a pan India network of 900 branches and a human capital base of 12750 by 2015.

YES BANK deals in corporate investment services. This involves providing, for a fee, financial advice to customers,[6] generally corporate or individual investors.YES BANK also competes in the South Asian commercial banking market. Commercial banking is essentially the equivalent of retail banking for commercial entities, but is however generally more expensive and accounts yield less interest, since corporate firms don't generally regard earning interest as a major component of their need for banking services.

YES BANK, India's fourth largest private sector Bank is an outcome of the professional entrepreneurship of its Founder, Rana Kapoor and his highly competent top management team, to establish a high quality, customer centric, service driven, private Indian Bank catering to the “Future Businesses of India”. YES BANK is the only Greenfield license awarded by the RBI in the last 17 years, associated with the finest pedigree investors.

Since its inception in 2004, YES BANK has fructified into a ‘“Full Service Commercial Bank” that has steadily built Corporate and Institutional Banking, Financial Markets, Investment Banking, Corporate Finance, Branch Banking, Business and Transaction Banking, and Wealth Management business lines across the country, and is well equipped to offer a range of products and services to corporate and retail customers. YES BANK has adopted international best practices, the highest standards of service quality and operational excellence, and offers comprehensive banking and financial solutions to all its valued

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customers. Today, YES BANK has a widespread branch network of over 500 branches across 350 cities, with 1050+ ATMs and 2 National Operating Centers in Mumbai and Gurgaon.

YES BANK has been recognized amongst the Top and Fastest Growing Banks in various Indian Banking League Tables by prestigious media houses and Global Advisory Firms, and has received several national and international honours for our various Businesses including Corporate Finance Investment Banking, Treasury, Transaction Banking, and Sustainable practices through Responsible Banking. The Bank has received numerous recognitions for its world-class IT infrastructure, and payments solutions, as well as excellence in Human Capital.

The sustained growth of YES BANK is based on the key pillars of Growth, Trust, Technology, Human Capital, Transparency & Responsible Banking. As the Professionals’ Bank of India, YES BANK has exemplified ‘creating and sharing value’ for all its stakeholders, and has created a differentiated Banking Paradigm with the vision of ‘Building the Best Quality Bank of the World in India’ by 2015.

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Business Strategy

Knowledge Banking: - One of the strengths and differentiating features of

Yes Bank is its knowledge banking approach that is the essence of all

offerings to its customers. Knowledge has been institutionalized as a key

ingredient in all internal and external processes and utilized to create

customized solutions for the clients’ specific requirements.

Technology and Operations: - As a new generation Bank, Yes Bank has

the advantage of accessing the latest available technology. The Bank has

taken a calibrated decision to invest in the best IT system and practices in

order to make its technology platform a strategic business tool for

building a competitive advantage.

Responsible Banking: -Yes Bank has a vision to champion ‘Responsible

Banking’ in India, where the concepts of Corporate Social Responsibility

(‘CSR’) and sustainability are integrated in its Business focus.

Business Lines: -Yes Bank has four distinct business segments to

effectively service the differentiated needs of its targeted customers.

Corporate and Institutional Banking (C&IB): -To cater to the needs of

large corporate & institutional clients, MNC’s, government companies

and PSU’s. Bank targets C&IB customers through its multifunctional

branches in the key metropolitican cities.

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Emerging Corporate Banking (ECB): -It is dedicated to partner with

growth-focused, fast-paced enterprises, which are emerging as a leader in

their respective business areas.

Business Banking: -To cater to the needs of the small and medium

enterprises (SME), Yes Bank has set up a dedicated business unit to focus

on delivering superior banking solutions specially designed to meet the

varying and dynamic needs of its SME clients.

Retail Banking and Wealth Management: -The Bank intends to develop

Retail Banking into a key value driver. Yes Bank offers its customers

choice & convenience, reflected in its branch layout & design, product

feature /design, options of distribution channels and superior technology

enabled service quality. Yes Bank predominantly offers value added retail

liability and third party wealth management products as well as retail

asset offerings through its sales and service network linked to its

branches.

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Private Banking: - Yes Bank is focusing on personalized relationship

banking for its top end High Net worth customers, supported by

structured financial solutions tailor-made to suit the needs of such

customers.

Product lines: - Yes Bank offers a wide range of fee-based products to

corporate and business banking customers to ensure a high degree of

cross-sell to clients.

Financial Markets: -Yes Bank financial markets was ranked second in the

‘Best for currency strategy’ and ‘best for technical analysis’ categories at

the Asia Money 2005 foreign exchange poll for India.

Transaction Banking: -Yes Bank Transaction banking group has adopted

a consultative approach and focus on knowledge and relationship banking

to enable customers to address strategic financial and operating needs in

the domain of:

Working capital and liquidity management

Asset management

Treasury integration

Exposure and risk management

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Yes Bank proposes to apply industry knowledge and superior technology

for offering innovative structured solutions integral to a company’s

financial supply chain.

Yes International Banking: - It offers a complete suite of international

banking products and services, driven by state-of-the art technology,

which includes Debt, Trade finance, corporate finance, Investment

banking and business advisory services, treasury and global Indian

banking. The Bank also plans to leverage its international presence, for its

capital raising activities. These services will initially be through

partnerships with international banks and financial institutions followed

by the establishments of branches and representative offices, as per

regulatory approvals.

Brand Creation: - The Bank believes that its differentiation begins with

its service and trust mark ’YES’. ‘YES’ represents the bank true spirit of

being service-oriented. The ‘YES’ brand creation effort is supported by

‘Triton Communications’, the principal advertising agency and ‘Ad

factors PR’, the Bank’s public relation consultant.

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Key Members of Yes Bank Management Team

NAME DESIGNATION

Mr. Rana Kapoor Managing Director & CEO

Mr. Sunil Gulati Group President - C&IB,

Transaction Banking

Mr. Deepak Gaddhyan Group President GRM Team.

Mr. Sumit Gupta Country Head – Emerging

Corporate Banking

Mr. Alok Gupta Country Head – life sciences &

technology

Mr. Rajnish Datta Country Head –Small business

banking group

Mr. Subir Bisht Chief Risk Officer

Mr. Sanjay Aggarwal Country Head –Credit Risk,

Business Banking

Mr. Varun Tuli President Business Banking

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Key Highlights & Milestones of Yes Bank.

Nov 2003 Incorporation of YES BANK

Limited

May 2004 RBI License to commence

banking business

Dec 2006 Ranked No.3 in the Business

World Survey of India’s Best

listed Banks

Mar 2007 Ranked No.2 among New Private

Sector Banks in the Financial

Express survey

Dec 2007 Won ‘Best CSR practice award

2007’

Dec 2007 Won ‘IT people award 2007’

Jan 2008 60 operational branches across

India

Mar 2008 Ranked No.3 among New Private

Sector Banks in the Financial

Express-E&Y survey & overall

#1 on credit quality & #2 on

Growth

Apr 2008 67 operational branches across

India

Corporate Finance Services

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Our Corporate Finance team offers our Corporate, Institutional Business Banking clients a combination of advisory services and customized structured products to meet their specialized requirements. We offer a wide range of Corporate Finance solutions to the following categories of clients:1.Local Corporates2.Multinational Companies3.Financial Institutions4.Public Sector UndertakingsWe, at YES BANK, believe we have substantial "knowledge arbitrage", which enables our clients to obtain superior financial returns in a risk mitigated manner. Each member of our Corporate Finance team brings with him a wealth of experience across transaction varieties and sectors, and enjoys strong, established relationships with both corporates and financial institutions.

Corporate Finance - Product and ServiceOur range of products and services fall under the following three broad categories:Infrastructure Banking Unit (IBU):This unit provides a full range of advisory and credit linked products to clients with a special focus on the infrastructure sector. We meet the financing needs of clients operating in the Power, Telecom, Mining, Oil & Gas, Transportation and Wind Energy segments. We assist our clients to obtain funding for projects and also offer end-to-end advisory services from the planning stage to financial closure.Structured & Project Finance Unit (SP&F):The SP&F unit offers structured and project finance expertise to non-infrastructure clients. The areas of specialization include:a. Securitization- We provide solutions that offer companies access to strategic sources of funding by converting assets with probable and predictable cash flows into a source of capital. This alters the risk profile of the corporate, provides the necessary liquidity and offers investors an opportunity to gain higher yields while taking acceptable risks.b. Structured Liability Products- The SP&F Group, in conjunction with the Debt Capital Markets Group, offers liability products to a range of financial and retail clients in packaging, structuring and placing ABS, MBS, CLOs and CDOs to generate cost-efficient liabilities for our clients.c. Debt Syndication- We provide debt solutions from local and international markets to both private and public sector institutions. Our strong relations with Borrowers, other banks and Institutional investors

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help our clients to fulfill their desired financing requirements.d. Leverage Finance- This encompasses the origination, structuring,underwriting and participation through Funding in Leveraged Finance transactions, including leveraged Buy-Outs, Take-overs and General Acquisition Finance.e. Asset & Tax based structures- Comprehensive solutions to provide tax benefits, finance for physical assets and advisory services for leases.Financial Restructuring Unit (FRU):This Unit provides specialized advisory services on financial restructuring, with expertise in the area of stressed assets. We offer our clients expert advice and creative product solutions to overcome balance sheet and financing constraints. The team also assists financially distressed companies in the creation and implementation of comprehensive financial restructuring packages.

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Balance Sheet of Yes Bank

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------------------- in Rs. Cr. -------------------Mar '13 Mar '12 Mar '11 Mar '10

12 mths 12 mths 12 mths 12 mths 12 mths

Capital and Liabilities:Total Share Capital 358.62 352.99 347.15 339.67Equity Share Capital 358.62 352.99 347.15 339.67Share Application Money 0 0 0 0Preference Share Capital 0 0 0 0Reserves 5,449.05 4,323.65 3,446.93 2,749.88Revaluation Reserves 0 0 0 0Net Worth 5,807.67 4,676.64 3,794.08 3,089.55Deposits 66,955.59 49,151.71 45,938.93 26,798.57Borrowings 20,922.15 14,156.49 6,690.91 4,749.08Total Debt 87,877.74 63,308.20 52,629.84 31,547.65Other Liabilities & Provisions 5,418.73 5,677.28 2,583.07 1,745.32Total Liabilities 99,104.14 73,662.12 59,006.99 36,382.52

12 mths 12 mths 12 mths 12 mths 12 mths

AssetsCash & Balances with RBI 3,338.76 2,332.54 3,076.02 1,995.31Balance with Banks, Money at Call 727 1,253.00 419.96 677.94Advances 46,999.57 37,988.64 34,363.64 22,193.12Investments 42,976.04 27,757.35 18,828.84 10,209.94Gross Block 427.12 331.05 255.3 206.4Accumulated Depreciation 208.67 161.98 125.78 92.32Net Block 218.45 169.07 129.52 114.08Capital Work In Progress 11.09 8.04 2.91 1.38Other Assets 4,833.21 4,153.48 2,186.11 1,190.73Total Assets 99,104.12 73,662.12 59,007.00 36,382.50

Contingent Liabilities 2,35,809.041,50,977.7

01,28,259.9

91,01,835.5

0Bills for collection 12,672.71 10,851.42 8,135.54 4,105.86Book Value (Rs) 161.94 132.49 109.29 90.96

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Corporate Government at YES BANK

As the fourth largest private sector Bank, YES BANK is establishing the highest standards of Corporate Governance across the organisation. With an excellent Board of Directors and the institution of all recommended sub committees, the Bank is compliant with all the necessary statutory requirements.

YES BANK is ordained to set the highest standards of Corporate Governance right from its inception benchmarked with the best class practices across the globe. Effective Corporate Governance is the manifestation of professional beliefs and values, which configures the organizational values, credo and actions of its employees. Transparency and accountability are the fundamental principles to sound Corporate Governance, which ensure that the organization is managed and monitored in a responsible manner for 'creating and sharing value'.

YES BANK believes that there is a need to view Corporate Governance as more than just regulatory requirements as there exists a fundamental link with the organization of business, corporate responsibility and shareholder wealth maximization.

Therefore, YES BANK is articulating a multi-stakeholder model (including shareholder value) of accountability that will manage the symbolic relationship between the various stakeholders. This approach will be central to the day-to-day functioning of the Bank and in implementation of its business strategy.

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Corporate Governance Initiatives at YES BANK

The Composition of the Board of Directors of YES BANK is in compliance with the Banking Regulation Act, all RBI guidelines (including the Ganguly Committee recommendations), Companies Act, Listing Agreement with the stock Exchange (s) and in accordance with best practices in Corporate Governance

In compliance with the requirements of the Companies Act, 1956, Banking Regulation Act, RBI guidelines, Listing Agreement with the stock exchange(s), 7 Board level sub-committees have been set up to ensure effective functioning of the Board.

The Bank has implemented a Code of Conduct and Ethics for the Board of Directors and Senior Management.

YES BANK has instituted a comprehensive code of conduct for prevention of insider trading in accordance with the requirements of SEBI (Prohibition of Insider Trading) Regulations, 1992

The Bank has formulated a Whistle Blower Policy in line with the best international governance practices

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CONCLUSION

Corporate governance philosophies differ around the world. However, with a few relatively minor exceptions, there exists a broad consensus on the elements of good corporate governance. It is widely understood that the most effective aspects of good corporate governance include:

•  a strong board of directors, independent of management and with sufficient expertise to oversee corporate management on behalf of the company’s shareholders;

•  management compensation oversight, such as a compensation committee comprised of independent directors, to prevent opportunistic behaviour by management and help link management compensation to corporate performance;

•  strong corporation laws and regulations designed to protect the rights of shareholders;

•  extensive public disclosure requirements, including both financial and non-financial reporting designed to give shareholders and potential investors an accurate, timely and thorough picture of the company’s performance and liabilities; and

•  a robust independent audit function, with sufficiently thorough procedures to confirm the accuracy of a public company’s financial disclosure statements and overseen by a board committee comprised of independent directors, or by some other mechanism independent of management.

Furthermore, these aspects of good corporate governance must be made credible by strong government and private-sector enforcement mechanisms. Government regulators and law enforcement agencies must have the resources and legal authority to conduct thorough investigations of potential wrongdoing and self-dealing by corporate management. And regulators and law enforcement agencies must aggressively investigate and prosecute managerial and corporate wrongdoing on a constant, ongoing basis, not just when a major scandal arises. Likewise, corporate compliance officers must have the powers they need to ensure that all corporate employees (including senior management) comply with the law and abide by the company’s internal corporate governance requirements. Other corporate governance ‘gatekeepers’ – such as lawyers and outside auditors – must be bound by a strong code of ethics and abide by the laws and professional requirements which apply to their profession. Without

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such aggressive overlapping enforcement mechanisms, even the best corporate governance standards can be undermined.

Despite the consensus, there remain differences in the degree of implementation, and until all markets converge their requirements on the highest quality corporate governance standards, investors will express different degrees of confidence in different markets, and markets and issuers demonstrating the highest standards will continue to attract investors on the most favourable terms. In short, the best public companies will continue to view strong corporate governance as an investment well worth making.

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