I.
Need and objective of the Code
Clause 49 of the Listing Agreement entered into with the
Stock Exchange, requires, as part of Corporate Governance the listed entities
to lay down a Code of Conduct for Directors on the Board of an entity and its
Senior Management. Senior Management has been defined to include personnel who
are members of its Core Management and functional heads excluding the Board of
Directors.
Accordingly the Bank has laid down this code for its Directors
on the Central Board and its Core Management (Core Management means top
executives of the Bank at the level of General Managers).
II.Banks belief System
This Code of Conduct attempts to set forth the guiding
principles on which the Bank shall operate and conduct its daily business with
its multitudinous stakeholders, government and regulatory agencies, media, and
anyone else with whom it is connected. It recognises that the Bank is a trustee
& custodian of public money and in order to fulfill its fiduciary
obligations and responsibilities. It has to maintain and continue to enjoy the
trust and confidence of public at large.
The Bank acknowledges the need to uphold the integrity
of every transaction it enters into and believes that honesty and integrity in
its internal conduct would be judged by its external behaviour. The Bank shall
be committed in all its actions to the interest of the countries in which it
operates. The Bank is conscious of the reputation it carries amongst its
customers and public at large and shall endeavour to do all it can to sustain
and improve upon the same in its discharge of obligations. The Bank shall
continue to initiate policies, which are customer-centric and which promote
financial prudence.
III.
Philosophy of the Code
The code envisages and expects –
a.
adherence to the highest standards
of honest and ethical conduct, including proper and ethical procedures in
dealing with actual or apparent conflicts of interest between personal and
professional relationships.
b.
full, fair and accurate
disclosures in the periodic reports required to be filed by the Bank with
government and regulatory agencies.
c.
compliance with applicable laws
rules and regulations.
d.
to address misuse or
misapplication of the Bank’s assets and resources.
e.
the highest level of
confidentiality and fair dealing within and outside the Bank.
A. General Standards of Conduct
The Bank expects all Directors and members of the
Core Management to exercise good judgement, to ensure the interests, safety and
welfare of customers, employees, and other stakeholders and to maintain a
cooperative, efficient, positive, harmonious and productive work environment
and business organisation. The Directors and members of the Core Management
while discharging duties of their office must act honestly and with due
diligence. They are expected to act with that amount of utmost care and
prudence, which an ordinary person is expected to take in his/her own business.
These standards need to be applied while working in the premises of the Bank,
at offsite locations where the business is being conducted whether in India or abroad, at Bank-sponsored business and social events, or at any other place where
they act as representatives of the Bank.
B. Conflict of Interest
v
A “conflict of interest” occurs when personal interest of any member of
the Board of Directors and of the Core Management interferes or appears to
interfere in any way with the interests of the Bank. Every member of the Board
of Directors and Core Management has a responsibility to the Bank, its
stakeholders and to each other. Although this duty does not prevent them from
engaging in personal transactions and investments, it does demand that they
avoid situations where a conflict of interest might occur or appear to occur.
They are expected to perform their duties in a way that they do not conflict
with the Bank’s interest such as –
Ø
Employment/Outside employment - The members of the Core Management are expected to devote their total
attention to the business interests of the Bank. They are prohibited from
engaging in any activity that interferes with their performance or
responsibilities to the Bank or otherwise is in conflict with or prejudicial to
the Bank.
Ø
Business Interests - If any
member of the Board of Directors and Core Management considers investing in
securities issued by the Bank’s customer, supplier or competitor, they should
ensure that these investments do not compromise their responsibilities to the
Bank. Many factors including the size and nature of the investment; their
ability to influence the Bank’s decisions, their access to confidential
information of the Bank, or of the other entity, and the nature of the
relationship between the Bank and the customer, supplier or competitor should
be considered in determining whether a conflict exists. Additionally, they
should disclose to the Bank any interest that they have which may conflict with
the business of the Bank.
Ø
Related Parties - As a
general rule, the Directors and members of the Core Management should avoid
conducting Bank’s business with a relative or any other person or any firm,
Company, Association in which the relative or other person is associated in any
significant role. Relatives shall include:
§
Father (including step father)
§
Mother (including step mother)
§
Son (Including step son)
§
Son’s Wife
§
Daughter (including step daughter)
§
Father’s father
§
Father’s mother
§
Mother’s mother
§
Mother’s father
§
Son’s son
§
Son’s son’s wife
§
Son’s daughter
§
Son’s Daughter’s husband
§
Daughter’s husband
§
Daughter’s son
§
Daughter’s son’s wife
§
Daughter’s daughter
§
Daughter’s daughter’s husband
§
Brother (Including steps brother)
§
Brother’s wife
§
Sister (including step sister)
§
Sister’s husband
v
If such a related party transaction is unavoidable, they must fully
disclose the nature of the related party transaction to the appropriate
authority. Any dealings with a related party must be conducted in such a way
that no preferential treatment is given to that party.
v
In the case of any other transaction or situation giving rise to
conflicts of interests the appropriate authority should after due deliberations
decide on its impact.
C.
Applicable Laws
The
Directors of the Bank and Core Management must comply with applicable laws,
regulations, rules and regulatory orders. They should report any inadvertent
non-compliance, if detected subsequently, to the concerned authorities.
D.
Disclosure Standards
The
Bank shall make full, fair and accurate disclosures in the periodic reports
required to be filed with Government and regulatory agencies. The members of
Core Management of the Bank shall initiate all actions deemed necessary for
proper dissemination of relevant information to the Board of Directors,
Auditors and other Statutory Agencies, as may be required by applicable laws,
rules and regulations.
E.
Use of Bank’s Assets and Resources:
Each
member of the Board of Directors and the Core Management has a duty to the Bank
to advance its legitimate interest while dealing with the Bank’s assets and
resources. Members of the Board of Directors and Core Management are prohibited
from:
Ø
using corporate property,
information or position for personal gain;
Ø
soliciting demanding, accepting or
agreeing to accept anything of value from any person while dealing with the
Bank’s assets and resources;
Ø
acting on behalf of the Bank in
any transaction in which they or any of their relative(s) have a significant
direct or indirect interest.
F.
Confidentiality and Fair Dealings
1.
Bank’s Confidential Information
Ø
The Bank’s confidential
information is a valuable asset. It includes all trade related information,
trade secrets, confidential and privileged information, customer information,
employee related information strategies, administration, research in connection
with the Bank and Commercial, legal, scientific, technical data that are either
provided to or made available to each member of the Board of Directors and the
Core Management by the Bank either in paper form or electronic media to
facilitate their work or that they are able to know or obtain access by virtue
of their position with the Bank. All confidential information must be used for
Bank’s Business purposes only.
Ø
This responsibility includes the
safeguarding, securing and proper disposal of confidential information in
accordance with the Bank’s policy on maintaining and managing records. This
obligation extends to confidential information of third parties, which the Bank
has rightfully received under non-disclosure agreements.
Ø
To further the Bank’s business,
confidential information may have to be disclosed to potential business
partners. Such disclosure should be made after considering its potential benefits
and risks. Care should be taken to divulge the most sensitive information, only
after the said potential business partner has signed a confidentiality
agreement with the Bank.
Ø
Any publication or publicly made
statement that might be perceived or construed as attributable to the Bank,
made outside the scope of any appropriate authority in the Bank, should include
a disclaimer that the publication or statement represents the views of the
specific author and not the Bank.
2.
Other Confidential Information –
The Bank has many kinds of
business relationships with many companies and individuals. Sometimes, they
will volunteer confidential information about their products or business plans
to induce the Bank to enter into a business relationship. At other times, the
Bank may request that a third party provide confidential information to permit
the Bank to evaluate a potential business relationship with that party.
Therefore, special care must be taken by the Board of Directors and members of
the Core Management to handle the confidential information of others
responsibly. Such confidential information should be handled in accordance with
the agreements with such third parties.
Ø
The
Bank requires that every Director and the member of Core Management, General
Managers should be fully compliant with the laws, statutes, rules and
regulations that have the objective of preventing unlawful gains of any nature
whatsoever.
Ø
Directors
and the members of Core Management shall not accept any offer, payment promise
to pay, or authorization to pay any money, gift, or anything of value from
customers, suppliers, shareholders/stakeholders, etc. that is perceived as
intended, directly and indirectly, to influence any business decision, any act
or failure to act, any commission of fraud or opportunity for the commission of
any fraud.
IV Good Corporate Governance Practices
Each member of the Board of directors and Core Management
of the Bank should adhere to the following so as to ensure compliance with good
Corporate Governance practices.
(a)
Dos
§
Attend Board meetings regularly and participate in the
deliberations and discussions effectively.
§
Study the Board papers thoroughly and enquire about follow up
reports on definite time schedule.
§
Involve actively in the matter of formulation of general
policies.
§
Be familiar with the broad objectives of the Bank and the
policies laid down by the Government and the various laws and legislations.
§
Ensure confidentiality of the Bank’s agenda papers, notes and
Minutes.
(b) Don’ts
§
Do not interfere in the day to day functioning of the bank. (This
stipulation does not apply to the Managing Director, Chief General Manager and
the Core Management).
§
Do not reveal any information relating to any constituent of the
Bank to anyone.
§
Do not display the logo/distinctive design of the Bank on their
personal visiting cards/letter heads. (This does not prevent the Managing
Director, Chief General Manager and Core Management from using DO Letterheads
or visiting cards with SBI’s logo thereon.)
§
Do not sponsor any proposal relating to loans, investments,
buildings or sites, for Bank’s premises, enlistment for empanelment of
contractors, architects, auditors, doctors, lawyers and other professionals
etc.
§
Do not do anything, which will interfere with and/or be
subversive of maintenance of discipline, good conduct and integrity of the
staff.
VI.
Waivers
§
Any waiver of any provision of this Code of Conduct for a
member of the Bank’s Board of Directors or a member of the Core Management must
be approved in writing by the Board of Directors of the Bank.
The matters covered in this Code of Conduct are of the
utmost importance to the Bank, its stakeholders and its business partners, and
are essential to the Bank’s ability to conduct its business in accordance with
its value system.
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