The Hindu Business Line : ICSI mulls new cadre for banks

THE Institute of Company Secretaries of India (ICSI) is now looking at creating niche job for its professionals in the banking sector. It proposes to initiate talks on the issue with the Reserve Bank of India and Indian Banks' Association.

"This in effect would mean that the institute would be customising its professionals to cater to specific industries. Company secretaries in practice with their legal orientation can lend their professional assistance in this area and also in investor management, stock exchange, and other secretarial compliances. This cadre of professionals can help banks in better compliances of various regulatory norms," ICSI sources told Business Line.

Elaborating further, sources said, "Banks in India are presently saddled with large volumes of non-performing assets (NPAs). Reduction of NPAs has emerged as a top priority for banks.

With the Securitisation Act in place, it will assist the banks for faster recovery of the existing NPAs.

It is equally, if not more, important to introduce proper systems and procedures for ensuring that future growth of NPAs is restricted.

As a corollary to this, the banks would need to tighten their credit risk management systems.

While there are various components of credit risks, one important aspect is to follow up on the loans after disbursement."

After disbursement of loans following areas such as post documentation inspection or audit, ensuring compliance of covenants of loan agreement by the borrower by periodical review, preparation and review of legal and secretarial compliance report by the assisted company on periodical basis, and provide opinions on various corporate events of the borrowing company, are the areas where the professional company secretary can provide professional assistance to the banks, he said.

"Over a period of time with adequate support and sponsorship from industry organisation like Indian Banks' Association it may be possible for practising company secretaries to render services in areas such as making due diligence exercise of the corporate customer to ensure secretarial or legal compliance at regular intervals, assessment of financial position of company or project and making of due diligence, and certification of shares and securities pledged to bank as primary or collateral security," a source said.

Under the new Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, a practicing company secretary can lend services in various areas, including monitoring secretarial compliances of Securitisation and Reconstruction Companies of the Banks and Financial Institutions, compliance of various RBI formalities for such companies, can assist in debt recovery and to act as a authorised representative before the Central Registry proposed to be set up.

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