NURTURING GROWTH WITH EFFECTIVE GOVERNANCE
Federal Bank’s governance is shaped by purpose-driven leadership exhibited by the Board and the Management and the values and behaviours expected from all employees. Our Bank’s top leadership actively encourages the development of new leadership mindsets and capabilities necessary to navigate the agile, digital, and disruptive financial landscape.
Federal Bank is deeply committed to upholding the highest governance, ethics, and integrity standards. To ensure the security and stability of our banking services, our Bank embraces world-class banking practices and maintains robust institutional governance and risk frameworks. These practices and frameworks undergo regular review, taking into consideration the dynamic nature of their operating environment.
Commitment to Excellence
Agility
Relationship Orientation
Ethics
Sustainability
At Federal Bank, we have established resilient systems and practices that place accountability, transparency, and fairness at the forefront of all our transactions. Our Bank’s organisational culture deeply embodies an unwavering dedication to ethics and a robust Code of Conduct.
Our Bank has implemented a Code of Corporate Governance and Code of Conduct for the Board of Directors and the Management. All members of the Board and the Senior Management Personnel shall affirm compliance with it on an annual basis.
Our Bank also has a Code of Ethics and Business Conduct for employees, which provides guidelines on standards of business conduct. The primary focus of the Code of Ethics and Business Conduct is achieving business success in ways that demonstrate respect for people and the planet and uphold the values and high standards of ethics
We maintain a steadfast zero-tolerance policy towards any instances of unethical behaviour. To ensure adherence to ethical standards, our Bank ensures that all employees and Directors are well-versed with our Code and strictly adhere to its principles. Moreover, we have implemented a range of policies to effectively address crucial areas such as anti-bribery and corruption, fraud prevention, protection for whistleblowers, and the prevention of insider trading, among other significant concerns.
We have a Board-approved Whistle Blower Policy named Protected Disclosure Scheme (PDS), where various stakeholders can lodge complaints/disclosures under the policy. The Whistleblower is assured secrecy of identity and confidentiality of the complaint/disclosure lodged under the policy. The Policy aims to establish an efficient vigil mechanism in our Bank to quickly spot any irregularities and deal with them as soon as possible.
Board Structure and Diversity
11
Total Board Members
72.72 %
Non-Executive Directors
18.18 %
Women on Board
Federal Bank has always believed in the strength that diversity offers, and this belief has resonated throughout our organisational structure. Our Bank’s Board comprises diverse individuals from various professional backgrounds and age groups, collectively encompassing a wide range of skill sets. The richness of experience and varied perspectives our Board members bring to the table hold immense value for the organisation.
As on March 31, 2023, Federal Bank’s Board comprised 11 Directors, of which two were women. Apart from the MD & the CEO and two Executive Directors, all other members of the Board are Independent Directors, including one female Independent Director. As on March 31, 2023, the average tenure of Directors on Board was 4.74 years.
Board Training
9
Total Number of Training and Awareness Programmes held for the Board
100 %
Directors in Respective Categories Covered by the Awareness Programmes
To enhance the collective knowledge, skills, and expertise of the highest governance body on sustainable development, our Bank organised various familiarisation programmes for our directors. The initiatives undertaken during the fiscal year 2022-23 included:
DAKSHA Webinar: A session conducted by Prof. Aswath Damodaran from NYU Stern School of Business, was attended by all Directors.
Certification Programme in IT and Cyber Security: Independent Directors Mr. Sankarshan Basu and Mr. Ramanand Mundkur participated in an online certification programme focussing on IT and Cyber Security.
Programme on Corporate Governance by Excellence Enablers
Online Certification Programme in IT and Cyber Security by IDRBT Virtual Workshop on Emerging Compliance Landscape
Virtual Conference on Green and Sustainable Finance by CAFRAL
Additionally, several familiarisation sessions were conducted for the Board and the Committee members in other areas, such as:
Sustainable Finance Dialogue: Training the Board of Directors on IFC Performance Standards, Regulatory Guidance on Sustainable Finance across various countries, and Climate Governance by International Finance Corporation (IFC).
Treasury Activities Information Sharing: An information-sharing session to all Board members, covering various Treasury activities.
Board Performance Evaluation
In accordance with the provisions of the Companies Act, 2013, Regulation 17 (10) and other applicable regulations of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015, the Board is mandated to conduct an annual performance evaluation. This evaluation encompasses the performance of the Board as a whole, individual directors, and the functioning of its various committees for the relevant year.
To initiate the evaluation process, a structured questionnaire is developed, considering inputs from the Directors. The questionnaire covers various aspects of the Board’s functioning, including the adequacy of its composition and committees, Board culture, and the execution of specific duties, obligations, and governance. The evaluation is carried out internally. The outcome of the Board evaluation is treated with utmost confidentiality.
Please refer to Page No. 114 of the Board’s report for details regarding the evaluation process and the Directors’ views.
Board Remuneration Policies
The remuneration proposed for Executive Directors (EDs) by the Nomination, Remuneration, Ethics and Compensation Committee (NRC) and Board, undergoes a two-step approval process. It is approved by the Reserve Bank of India (RBI) and the shareholders of our Bank. The voting results of the General Meeting/Postal Ballot, including the remuneration approvals, can be accessed on our Bank’s website and stock exchanges. Furthermore, in the case of Independent Directors, any proposed fixed remuneration must also receive approval from the shareholders. The NRC and Board put forward this proposal, and it is subject to the shareholders’ scrutiny and endorsement.
Board Committees
To work on making informed decisions and specific recommendations in our Bank’s best interests, Federal Bank has established various Committees of Directors to monitor the activities falling within their terms of reference, including all the amendments made in the regulatory laws from time to time and presented it to the Board. These committees are responsible for making informed decisions in their scope.
The details of the Committees are noted in the ‘Board Committee and its Terms of Reference’ in the Corporate Governance Report Section of this Annual Report.
*Note: The Committees are established as per relevant provisions of the Companies Act, 2013 (the Act) and relevant rules made thereunder, the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI Listing Regulations), the Banking Regulation Act, 1949, the guidelines issued by the Reserve Bank of India, as amended, from time to time and the Articles of Association of the Bank (‘the extant laws’).
