The Paytm crisis: Can an advisory panel make a difference?

livemint.com:

One 97 Communications has appointed an advisory board of prominent experts, including an ex-regulator, to advise it on regulatory and compliance matters. Consider the following points. One97, Paytm’s parent, is not the regulated entity.

It is Paytm Payments Bank (PPB) that is regulated by RBI and in trouble for repeated non-compliance. How can an advisory panel appointed by the parent entity have a say in advising a regulated entity (PPB) on regulatory compliance? If this panel is advising One97, then it has to ensure that information shared with the external advisory panel is within regulatory kosher limits and does not infringe on the role of PPB’s board. Needless to say, an appropriate measure would have been if the bank’s board had sought external advice independently.

Further, an advisory board making suggestions on how to enhance compliance with the rules would only be as good as the entity’s compliance culture. Having a panel of wise counsel is a display of good intent, which businesses must do, especially regulated and listed entities. But then, such advisory committees could even be established in the normal course of business.

Indeed, that would convey an effort to add value and adopt higher standards of internal governance as a matter of routine and good business hygiene. However, what may seem like an expensive investment in usual times, the kind of idea that often makes business promoters cringe, tends to assume a whole new appeal once the stakes rise and compliance becomes a matter of fiefdom retention. This can happen, for example, if the business’s board has forgotten its core job of corporate oversight, necessitating an advisory body to perform that function.