The Board has constituted several committees to deal with specific matters as well as delegated powers to them for carrying out various activities for effective functioning of the company. The Audit Committee and Stakeholders Relationship Committee have been constituted in accordance with the guidelines issued by the Reserve Bank of India, Securities and Exchange Board of India read with requirements of the Companies Act, 2013. Besides the above, the Board has also set up additional committees such as Nomination & Remuneration Committee, Share Transfer and Other Matters Committee (STOM) Committee on Frauds, Customer Service Committee, Risk Management Committee, Corporate Social Responsibility Committee, Review Committee for classification and declaration of borrowers as wilful defaulters, ESOP Allotment Committee. Apart from Board Committee of the Bank, the Bank has also constituted Non-Board Committees such as Credit Committee, Premises Committee, Investment Committee, Asset Liability Committee (ALCO), Information Security Committee, First Tier Audit Committee, Customer Services Standing Committee, IT Strategy Committee, Committee for identification of wilful defaulters and non-cooperative borrowers, Vigilance Committee, Business Responsibility Committee, & Steering Board Committee.
|Name of the committee||Chairman||Members|
|Audit Committee||Mr. Prakash Apte||Prof. S. Mahendra Dev
Mr. Uday Chander Khanna
|Stakeholders Relationship Committee||Prof. S. Mahendra Dev||Mr. Uday Kotak
Mr. Dipak Gupta
|Nomination & Remuneration Committee||Mr. Amit Desai||Dr. Shankar Acharya
Mr. Prakash Apte
|Share Transfer and Other Matters (STOM) Committee||Mr. Uday Kotak||
Mr. C. Jayaram
Mr. Dipak Gupta
|Committee on Frauds||-||Mr. Uday Kotak
Mr. Dipak Gupta
Mr. Prakash Apte
Mr. Uday Chander Khanna
|Customer Service Committee||Prof. S. Mahendra Dev||Mr. Uday Kotak
Mr. Dipak Gupta
|Corporate Social Responsibility Committee||-||Mr. Dipak Gupta
Mr. C. Jayaram
Prof. S. Mahendra Dev
|Risk Management Committee||Mr. Amit Desai||Mr. Uday Kotak
Mr. Dipak Gupta
Mr. Arvind Kathpalia
|ESOP Allotment Committee||-||Mr. Uday Kotak
Mr. Dipak Gupta
Mr. C. Jayaram
|Review Committee for classification and declaration of borrowers as Willful defaulters||Mr. Uday Kotak||Mr. Prakash Apte
Prof. S. Mahendra Dev
|Committee on Promoter Dilution||Dr. Shankar Acharya||Mr. Prakash Apte
Mr. Amit Desai
The terms of reference of the Audit Committee of the Bank are as follows:
Documents/Reports Review and Financial Reporting Process
- Review and update the Audit Committee Charter periodically, as conditions dictate.
- Oversight of the Bank’s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.
- Approval of payment to statutory auditors for any other services rendered by the statutory auditors.
- Review the organization’s annual financial statements and any reports or other financial information submitted to any regulatory body, or the public, including any certification, report, opinion, or review rendered by the independent auditors or firm of accountants.
- Review, with the management, the annual financial statements and auditor’s report thereon before submission to the board for approval, with particular reference to:
- Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s report in terms of clause (c) of sub-section 3 of section 134 of the Companies Act, 2013.
- Changes, if any, in accounting policies and practices and reasons for the same
- Major accounting entries involving estimates based on the exercise of judgment by management
- Significant adjustments made in the financial statements arising out of audit findings
- Compliance with regulatory guidelines, listing agreement and other legal requirements relating to financial statements
- Disclosure of any related party transactions
- Qualifications in the draft audit report
- Going concern assumption
- Compliance with Indian Accounting Standards issued by the Institute of Chartered Accountants of India
- Review significant Related Party transactions – Related Parties to have the same meaning as provided in Clause 49(VII) of the Listing Agreement.
- Approval or any subsequent modification of transactions of the company with related parties;
- Scrutiny of inter-corporate loans and investments;
- Valuation of undertakings or assets of the company, wherever it is necessary;
- Evaluation of internal financial controls and risk management systems.
- Review, with the management, the quarterly financial statements before submission to the board for approval
- Review Management discussion and analysis of financial condition and results of operations.
- Review the regular internal reports to management prepared by the internal auditing department and management’s response, including those pertaining to internal control weaknesses.
- Discuss with independent statutory auditors significant issues raised in the Long Form Audit Report and follow up there on.
- Discuss with internal auditors any significant findings and follow up there on.
- Review reasons for revenue leakage and approve corrective action plan and monitor them at regular interval. Monitor areas of repeat occurrences, if any and ensure immediate actions are taken to prevent such repeat occurrences of revenue leakage.
- Review the financial statements of unlisted subsidiary company/ies and more particularly the investments made by them.
- Review the internal audit reports and minutes of meetings of Audit Committee of the subsidiaries.
- Reviewing, with the management, the statement of uses / application of funds, wherever necessary, raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document / prospectus / notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter wherever necessary.
Independent Statutory Auditors
- Recommend to the Board of Directors the appointment, re-appointment, replacement and removal of the independent statutory auditors, considering independence and effectiveness and approve terms of appointment, the fees and other compensation to be paid to the independent statutory auditors.
- Approve all payments for services rendered other than as statutory auditors.
- Review and monitor, with management, independence, the performance of the statutory auditors and effectiveness of audit process.
- Periodically consult with the independent statutory auditors in the absence of management about internal controls and the fullness and accuracy of the organization’s financial statements.
- Discuss with the independent statutory auditors before commencement of the audit the nature and scope of the audit.
- Discuss and ascertain from the independent statutory auditors post the completion of the audit, areas of concern, if any.
- Review management letters / letters of internal control weaknesses issued by the statutory auditors.
Internal Audit Department
- Approve appointment, re-appointment, replacement and removal of the concurrent auditors and outsourced internal auditors and fees and other compensation to be paid to them.
- Review with management, performance of internal auditors and adequacy of the internal control systems.
- Review the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure, coverage and frequency of internal audit.
- Review the findings of any internal investigations into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and report the matter to the Board of Directors.
- Approve, review and monitor the Risk Based Internal Audit Plan each year.
- Review appointment, removal, performance and terms of Head – Internal Audit.
Inspections conducted by regulators
- Read the audit inspection reports of the inspection team of Reserve Bank of India or any other regulator, approve action plans for corrective actions to be taken and monitor compliance there of.
- Review the adequacy of Bank’s financial and risk management policies and report the matter to the Board of Directors.
- Review the overall exposure to Capital Market.
- Establish regular and separate systems of reporting to the Audit Committee by each of management, the independent statutory auditors and the internal auditors regarding any significant judgments made in management’s preparation of the financial statements and the view of each as to appropriateness of such judgments.
- Following completion of the annual audit and internal audit plan, review separately with each of management, the independent statutory auditors and the internal auditing department any significant difficulties encountered during the course of the audit, including any restrictions on the scope of work or access to required information.
- Review any significant disagreement among management and the independent statutory auditors in connection with the preparation of the financial statements.
- Review any significant disagreement among management and the internal audit department in connection with the observations made in the internal audit report.
- Review with the independent statutory auditors and management the extent to which changes or improvements in financial or accounting practices, as approved by the Audit Committee, have been implemented. (This review should be conducted at an appropriate time subsequent to implementation of changes or improvements, as decided by the Committee.)
Ethical and Legal Compliance
- Establish, review and update periodically a Code of Conduct and ensure that management has established a system to enforce this Code.
- Review management’s monitoring of the Bank’s compliance with the organization’s Code of Conduct, and ensure that management has the proper review system in place to ensure that Bank’s financial statements, reports and other financial information disseminated to regulators, and the public satisfy legal requirements.
- Look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non payment of dividend declared) and creditors.
- Review the functioning of the Whistle Blower mechanism.
- Review reports from the Bank’s compliance officer.
- Approval of appointment of CFO after assessing the qualifications, experience and background, etc. of the candidate;
- Perform any other activities consistent with this Charter, the Bank’s By-laws and governing law, as the Committee or the Board deems necessary or appropriate.
The Bank has constituted a First Tier Audit Committee as per the guidelines issued by the Reserve Bank of India. The Committee screens the matters entrusted to the Audit Committee and also the routine matters such as overseeing the programme of inspections and compliance of inspection reports so as not to burden the Audit Committee with matters of detail. During the year, fourteen meetings of the Committee were held. The Committee meets for approximately four hours.
The Stakeholders Relationship Committee of the Bank reviews the complaints received from the shareholders and ensures redressal thereof. The constitution and composition of the Committee is in accordance with the provisions of Regulation 20 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the criteria specified by the Reserve Bank of India. The Company Secretary acts as the Secretary and has been appointed as the Compliance Officer of the Committee.
During the year under review, 35 investor complaints were received and no investor complaint was pending as on 31st March 2016. As on 31st March 2016, there were no instruments of transfer of shares, pending. No penalties or strictures were imposed on the Bank by any of the Stock Exchanges, SEBI or any other statutory authority on any matter related to capital markets, during the last three years.
A brief description of the terms of reference of the Committee is as follows:
- identify persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down, recommend to the Board their appointment and removal and shall carry out evaluation of every director’s performance.
- formulate the criteria for determining qualifications, positive attributes and independence of a director and recommend to the Board a policy relating to the remuneration for the directors, key managerial personnel and other employees.
- while formulating the policy ensure that—
- the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the company successfully;
- relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and
- remuneration to directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals.
The Board at its meeting held on 11th May 2016 has renamed the existing Share Transfer and Routine Transactions (START) Committee as Share Transfer and Other Matters Committee (STOM) and authorized the Committee to delegate its powers which are routine in nature and which do not necessarily require Board/Board Committee authorization/resolutions to one or more members of the Operating Management Committee (Operating Mancom) of the Bank.
The terms of reference of the STOM Committee is as follows:
(a) To approve transfer, transmission, transposition, name deletion, consolidation and splitting of share and debenture certificates of the Company.
(b) To issue duplicate share/debenture certificates.
(c) To apply for registration of the Company with various authorities of any state or Centre including sales tax authorities, income tax authorities, shops & establishment authorities, and to do or perform all matters relating to such matters.
(d) To apply, in the name of and for the Company for telephone, telex, fax and other telecommunication and electrical/electronic connections and to do all matters relating to such applications.
(e) To open, operate and close Bank Accounts of the Company and change the operating instructions of existing Bank Accounts of the Company.
(f) To authorise persons to sign on behalf of the Company Share Certificates, Share Allotment Letters, Deposit Receipts.
(g) To authorise persons to represent the Company at General Meetings of any company or cooperative society of which the Company is a shareholder/member.
(h) To fix the dates for Closure of the Company’s Register of Members and Debenture holders and Transfer Books of Shares or Debentures and/or fixing Record Dates, in consultation with the Stock Exchanges.
(i) To authorise the opening of Securities General Ledger Account or any other account with any scheduled banks or with any department of the Reserve Bank of India.
(j) To authorise persons to execute Loan Agreements, Demand Promissory Notes and any other documents as may be necessary for lending out of any line of credit sanctioned to the Company.
(k) To authorise officials of the Company to execute transfer deeds on behalf of the Company.
(l) To authorise officials of the Company to sign documents for registration of motor vehicles and to do all acts and things for the transfer of any such motor vehicles.
(m) To authorise employee(s) or others to execute, for and on behalf of the Company, agreements, applications, deeds, documents and any other writings in connection with the business of the Company and, if required, to issue Power of Attorney in favour of such persons for the purpose.
(n) To authorise employee(s) or others to represent the Company before any Court, Tribunal, Consumer Redressal Forum or any Statutory or other Authority on any matter relating to the operations of the Company or with which the Company is in any way connected or to represent the Company generally or for any specific purpose or purposes and, if required, issue Power of Attorney in favour of such persons for the purpose.
(o) To appoint or change nominees to hold shares for and on behalf of the Company in any subsidiary/associate companies.
(p) To grant permission and authorise incorporation of companies, with a prefix “Kotak Mahindra” before the name.
(q) To authorise the use of the Common Seal of the Company and to appoint persons to sign/countersign documents, etc. on which the Common Seal is to be affixed.
Pursuant to the directives of the Reserve Bank of India, the Bank has constituted a Committee on Frauds for monitoring and reviewing all the frauds involving amounts of ` 1 crore and above.
The Bank has, pursuant to the directives issued by the Reserve Bank of India, constituted a Customer Services Committee. The Committee has been constituted to bring about ongoing improvements in the quality of customer services provided by the Bank. The Committee would also oversee the functioning of the Customer Service Standing Committee, compliance with the recommendations of the Committee on Procedures and Performance Audit and Public Services (CPPAPS) and also mount innovative measures for enhancing the quality of customer service and improving the level of customer satisfaction for all categories of cliental, at all times.
The Bank has constituted a Corporate Social Responsibility Committee pursuant to the provisions of the Companies Act, 2013. The Committee has been constituted to:
- Formulate and recommend to the Board, a Corporate Social Responsibility (CSR) Policy which shall indicate the activities to be undertaken by the Bank, as laid down in Schedule VII to the Act;
- Recommend the amount of expenditure to be incurred on the CSR activities;
- Monitor Bank’s CSR Policy and implementation of CSR projects undertaken from time to time.
The terms of reference of the Committee includes to identify, monitor and measure the risk profile of the Bank; develop policies and procedures; verify models that are used for preparing complex products; review models as development takes place in the markets and also identify new risks; monitor compliance of various risk parameters by operating departments; design stress scenarios to measure the impact of unusual market conditions and monitor variance between actual volatility of portfolio value and that predicted by risk measures; and ensure that the Bank’s credit exposure to any one group or industry does not exceed the internally set limits and that the risk is prudently diversified.
The terms of reference of the ESOP Allotment Committee is as follows:
To allot shares arising out of the options exercised in accordance with the terms and conditions of the various ESOP Schemes of the Bank
- To hear the grievance of the borrowers who represent that they have been wrongly classified as willful defaulters.
The terms of reference are as follows:
To study and advise the Bank on the future course of action to achieve dilution of promoter holding in the Bank as directed by the Reserve Bank of India.