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“As managing directors, you carry the highest responsibility for ensuring your organisations lead, not only in financial performance but also in ethical governance. Directors are at the apex of organisational governance. Sebi explicitly places responsibility on the board of directors, MDs, and compliance officers to ensure compliance with PIT regulations,” Pandey said. He was interacting with CEOs of listed banks.
His comments come against the backdrop of Sebi in May barring IndusInd Bank‘s former CEO Sumant Kathpalia, former deputy CEO Arun Khurana and three other executives of the bank from trading in the securities market over allegations of insider trading related to accounting discrepancies that they knew about more than a year before they were revealed to other shareholders and the public.
“As a fiduciary, the bank frequently comes into possession of Unpublished Price Sensitive Information (UPSI) concerning other listed companies — information that could directly impact the stock market if misused or leaked,” Pandey said.
He said senior executives of banks should be careful when the bank sanctions a major loan to a listed company, as it gains access to financial information well before the market does.
Similarly, during debt restructuring negotiations or repayment settlements, sensitive data on a company’s liquidity position becomes available to the bank, and when participating in committee of creditors proceedings for stressed assets, banks often learn about strategic corporate decisions much before they are publicly disclosed, he said.
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