According to Uday Kotak, the Tuesday speaker, Indian corporate governance can be measured by four quadrants. To most Indians these quadrants are already known, but from the speaker’s narration, they were recalled in a manner that will definitely make them hard to forget.
“The top right quadrant is the Rama quadrant,” as we all know Lord Ram to have been right in letter and spirit. Then there is the Krishna quadrant, which is right in spirit too, but “at times, a little more flexible in letter.” A famous example from the Mahabharata is when Lord Krishna lowered his chariot so that an arrow aimed at Arjuna missed its target. By doing so, Krishna proved that he was right in spirit, but in letter he changed the rules of the game so that good ultimately prevailed over evil.
The bottom left quadrant, Uday Kotak calls the Duryodhana quadrant. “It’s a quadrant that always tries to be right in letter, but wrong in spirit,” he stated. A classic example from Indian mythology is when Duryodhan and Shakuni tricked Yudhisthira into a game of dice, resulting in the latter being sent on exile. Finally, the last quadrant is the Ravana quadrant, which won’t baffle you unless you are from the south: “Wrong in letter and wrong in spirit.”
Uday Kotak encourages us to reach a consensus on where and how these four quadrants can be applied to corporate scenarios. Most of us will agree that endorsing the Rama quadrant is the most ethical way forward, but at some points in time, “we come to a position where we have to take a call.” As the vice-chairman and managing director of Kotak Mahindra Bank, the speaker concedes to a “spill-over” at most to the Krishna quadrant.
Unfortunately, Indian society is torn between the Krishna quadrant and the Duryodhana quadrant. Perhaps, “we wouldn’t have a legal fraternity if we didn’t have the Duryodhana quadrant.” And, probably, would never require an interpretation of the letters of the law to resolve issues with “wappropriate legal remedies.” Instead, we are a nation that is still striving to emulate the values of the upper quadrants.
In chairing the SEBI committee, the speaker was often made to ponder about these quadrants, and “how the concept of principles can be converted into rules” since the trouble with principles is that their interpretations by different people “tend to deviate between the Krishna and Duryodhana quadrants.”
An example that highlights this dilemma is the banking sector. “On the banking side, we have both public sector and private sector banks, but on the borrowers side, we mostly have the private sector.” Unfortunately, the public interest has not been served by bank nationalisation in over fifty years, and a number of public sector banks have been recapitalised by taxpayers’ money. So how can we as a society be safeguarded from a situation where a large amount of taxpayers’ money “goes down the drain” in recovering bad loans?
Uday Kotak answers, “The internal spring for all of us is hope, therefore I do believe that India will find its way out of this issue of public sector banking through GST and the Bankruptcy Code.” However, by no means does he aim to leave us with the assumption that privatisation is the solution for the banking sector.