India Inc rushes for cover against harassment suits
DEV CHATTERJEE
Mumbai, 2 December
The Tarun Tejpal and Phaneesh Murthy cases have put more pressure on
India Inc. Leading companies are rushing to take insurance cover that
would cover the legal expenses of sexual harassment and other
employee- related suits.
The legal fees in such cases can go up to ₹ 5 crore. The push for
taking increased cover is coming mainly from independent directors on
the boards of companies as more employees are coming forward to sue
their employers and directors over matters ranging from sexual
harassment to wrongful discrimination.
Earlier, only those Indian companies that had significant presence in
the US took such covers.
Insurers say many companies are realising that it's better to take
added insurance cover for sexual harassment, which comes as an
additional cover in the directors and officers (D& O) liability
insurance policy.
VRamakrishna, MD of India Insure Brokers, says apart from D& O cover,
Indian companies have the option of taking employment practices
liability insurance ( EPLI) which covers alleged wrongful acts
including harassment, wrongful termination and discrimination.
"In India, employees are still not aggressive while suing their
employers as in the US. But the awareness to get insurance cover is
rising very fast," he adds.
Big companies more aware
Insurers say there is more awareness among top- rated Indian companies
as they are getting globalised, and media coverage of harassment and
rape cases has increased.
In case a company director is convicted by a court of wrongdoing, then
the insurance company does not pay out any money and recovers it from
the convict. In the sexual harassment case involving Murthy, the
insurance company agreed to pay part of the compensation for an out-
ofcourt settlement as the final compensation and legal fees could have
been higher if the case was prolonged.
Insurers say it is very important to understand that they pay legal
fees only in those cases where they expect the director to be proved
innocent by a court of law.
KK Mishra, CEO of Tata AIG General Insurance, says before issuing a D&
O policy, they make sure that the proposal form is signed by either
the CEO or CFO of the company.
"When a CEO or a CFO signs on the proposal form for a D& O policy,
they will make sure that proper guidelines and systems are in place in
the organisation which would minimise such cases. But above all this
is a matter of right behaviour of the top management."
Legal fees in such cases can go up to ₹ 5 crore
New stress- testing guidelines for banks
PRESS TRUST OF INDIA
Mumbai, 2 December
The Reserve Bank ( RBI) on Monday issued updated guidelines for
stress- testing banks, effective from April.
"The RBI would expect the degree of sophistication adopted by banks in
their stress- testing programmes to be commensurate with the nature,
scope, scale and the degree of complexity in the banks business
operations and the risks associated with those operations," RBI said.
The central bank also said accordingly, banks would be classified into
three groups based on their size.
Under the classifications, the first group has risk weighted assets (
RWAs) of over ₹ 2 lakh crore, the second RWAs between ₹ 50,000 crore
and ₹ 2 lakh crore; and the third RWAs of under ₹ 50,000 crore.
Explaining the reason for the new guidelines, the RBI in a
notification, said, " Depth and duration of the recent global
financial crisis has led many banks and supervisory authorities across
the world to question whether the existing stress- testing practices
are sufficient and robust to cope with the rapidly changing
circumstances." The financial crisis proved to be more severe than the
dark scenarios assumed by banks in their stress- testing, it said,
adding the country has had having stress- testing guidelines in place
since 2007. The updated guidelines are inspired by global best
practices from the Basel Committee on Banking Supervisions principles
for sound stress- testing practices and supervision issued in May
2009, the RBI said.
Among other things, they contain guidelines on overall objectives,
governance, design and implementation of stress- testing programmes.
They also give a list of possible shocks and require banks to carry
out stress tests accordingly, it said, adding though the severity of
the scenario differs, banks should pass at least the baseline shocks.
CSR spending to rise due to Companies Act, 2013
http://epaper.business-standard.com/bsepaper/svww_zoomart.php?Artname=20131203a_002101002&ileft=723&itop=185&zoomRatio=130&AN=20131203a_002101002
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CS A Rengarajan
9381011200
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