May-2015

COVER
PRESIDENT’S
STORY
COMMUNIQUE
and governance aspects with their
business strategies.
Banks and their stakeholders
Integrated reporting includes stakeholders’
engagement, sustainability,
community initiatives, governance,
environmental and social consciousness.
Stakeholder power is an important
factor to consider whenever
one describes about the relationship
between a business and its stakeholders.
In the context of strategy, what
is important is the power and influence
that a stakeholder has over the
business objectives. Each stakeholder
exhibits a different interest and influence
and impact the organizations
with their power. The stake holders
of a bank include shareholders, investors,
peer banks, RBI, directors,
managers, employees, customers,
community, government and credit
rating agencies. See table 1
Why Banks to follow integrated
reporting?
1. The Banks are run on Government,
public and corporate funds
for the cause of public and corporate.
More than any corporate it is
the banks which deal with the public
and their funds. Hence it is their
duty to give adequate information
about the various aspects which are
material to the performance of the
banksThe stake holders (mentioned
in Table -1) must be given comprehensive
information as to fulfill their
main interests in the organization.
Transparency is required so as to give
total information pertaining to the
functioning of banks.
2. A special mention may be made
about the customers / clients without
whom the banks may not survive.
When Banks seek scores of
particulars about the customers in
the name of KYC Norms, then why
customers be deprived of the information
about Banks with which they
want build up financial relationship?
3. Only when an institution measures
what it has, it can strive to
maintain and improve itself. Banks
can report their history, brand value,
customer satisfaction levels and socio
economic impacts through integrated
reporting. Integrated reporting
is essential for the survival of Banks
in the fiercely competitive environment.
4. It helps Banks to be in the frame
work of accounting and other regulatory
policies on par with the international
banks and get appropriate
credit ratings by the credit rating
bodies.
What is being reported in Indian
Banks? - Current Trends
On an analysis of annual reports of
a few banks in India, it is found that
they are able to integrate non financial
data with financial data in a
Table-2
Sample Banks – Reporting Style
Bank
Extent of integration
Andhra Bank
Limited
SBH
Limited
Indian Bank
Limited
ICICI bank
Moderate
HDFC
Integrated
South Indian Bank Limited
Stanchart Bank Limited
Standard Bank, Africa Integrated
Source: Websites of respective Banks
limited way. The analysis is based on
3 public sector banks, three private
banks and two foreign banks.
The banks reports have two distinct
aspects i.e., mandatory disclosures
and voluntary disclosures. It is
observed that out of the eight banks
whose reports are analysed, majority
of the banks follow limited integration.
All the banks have incorporated
statements on CSR and corporate
governance in addition to financial
data. It is observed that Indian
Banks have given a note on Basel II
requirements which to some extent
clarify on risk factors such as operational
risk, market risk and investment
risk. These initiatives have been
taken on the basis of policy framework
initiated by the RBI. HDFC
is the only bank in India to comply
the integrated reporting to a great
extent. The best example for the integrated
reporting by Banks can be
Standard Bank, Africa.
What can be integrated reporting
in Banks?
Banks overview and business
model: The Bank’s mission, principal
activities, markets, products and
services; its business model, value
drivers and critical stakeholder dependencies;
and its attitude to risk.
Operating context, including
risks and opportunities: The
commercial, social and environmental
context within which the bank
operates, organization’s ability to
create and sustain value in the short,
medium and long term and the
bank’s key risks and opportunities.
Strategic objectives and strategies
to achieve those objectives:
It sets out how the Banks will measure
achievement and target outcomes
for the short, medium and
long term. It includes risk management
strategies, the uniqueness and
core competencies of the Banks to
convert the forth coming opportunities
into reality.
Governance and remuneration:
It explains the strategies of the
Banks in employing key personnel
and leaders. Recruitment of these
leaders influence the organisational
culture, relationships and ethical
considerations which in turn be-
32 the MANAGEMENT ACCOUNTANT MAY 2015
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