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Given below keynote address by Dr. Bimal Jalan, which has caught attention of manyon Ethical Value Added to Corporation.

Just wanted to share with all of you.

It's important to go back to business ethics: Dr. Bimal Jalan

The following are the edited transcripts of RBI Governor Dr. Bimal Jalans keynoteaddress at the Business Today Corporate Governance Summit held in Mumbai. The

Summit, sponsored by the Tata Group, included the keynote address by Dr. Jalanand a panel discussion on the topic by Adi Godrej, MV Kamath and Joel Stern.

"I am really very happy to be here to release The Annual survey of Indias Wealth

Creators, many of whom happen to be present here today. "

"It is also very important to my mind that the occasion happens to be releasing theconcept of wealth creation in terms of EVA and MVA (the Economic Value Added and

the Market Value Added) concepts which are certainly much more valid in trying toassess the contribution of enterprises to a countrys income or a countrys wealth

rather than net earnings which are normally used for market capitalization which is aconcept that we use day to day. "

"So in any assessment of the contribution of the corporate sector to our countrys

growth the use of capital, I think what it measures really is the efficiency with whichyou are using your capital both in terms of market prices as well as in terms of what

is referred to as the economic prices. So the concepts are extremely valid. "

"The importance of the subject for India can hardly be exaggerated because we arein a period of transition from the old methods of doing things to the new methods of

doing things, from family oriented business enterprises to much more professional

enterprises, to a less competitive, better tuned closed system to an open system. So

the importance of Corporate Governance in making this transaction is moreimportant, more urgent in our kind of a country who has well-established industrial

societies. "

"It has become very urgent and a very contemporary thing to talk about after therecent debacles of governance in some of the best known corporate in the United

States, more recently in the U.K. and Europe as well. "

"The Stock Exchange authorities in the United States as well as in the rest of theworld are also busy trying to evolve new standards of disclosure, accountability,

accounting, auditing rules, placing greater responsibilities on the individuals for theaccurate depiction of the state of finances and I am sure the concept that you are

talking about, of the EVA and the MVA and the kind of contribution that you have

made could form an important part of the whole business of disclosing the real stateof a company or a corporation. "

"The different kinds of Corporate Governance models are also being debated, I thinkall across the world today. India is an economy in transition - as a competitive

economy that is moving fast to becoming an industrial society. In becoming animportant partner in trade and finance with the rest of the world, I hope that we will

distill the best conclusions from this Corporate Governance Summit. "

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"Structure is important, CEOs responsibility is important, the shareholdersaccountability to the market is important, the disclosure norms, auditing are

extremely important. But the point I want to make to you that above all there isanother attribute to Corporate Governance, which doesnt receive that, much

attention as it should. That is Ethics. Ethics cannot be captured in the structure or inthe published balance sheet, but I am sure that you know it when you see it. "

"What does it represent? It represents in the corporations, to my mind, a respect notonly for the law as it is written, not only for the accounting roles, rules as they are

published but what is behind it that is the sanctity of contracts, sanctity of

truthfulness, all the rules that you see, the structures you see, are ultimatelydesigned to promote an ethical conduct on the part of the corporations. "

"Customer Service for example, is not only connected with sales, it has also some

thing to do with your service which cannot be captured in the structures and rulesand accounting rules. All of us say it is lip service, but we have to look at it that

whether you are dealing with your customers in ethical way, whether you are dealingwith your contracts in ethical way, whether there is truth and trust among your

suppliers and among your buyers in regard to money and goods. "

"In Accounting, you can lay down any number of rules but if you ask fouraccountants you will find that they will give a different treatment of, for example, of

Receivables. What is a Receivable, what is not a Receivable, what is due and what isnot Due and what should be shown in the balance sheet ultimately is a question of

ethics, what you think is right and if you tell your accountant that what you think isright then you believe in it. "

"Ethical conduct is not an emotional thing or a sentimental thing. It is in the interest

of the corporation. If you look at the corporations, which over a period of fifty yearsor hundred years have done well, you will find that they are known for their ethics

even today."

"I think we are passing through a transitional phase and where it is the important to

go back to the business ethics. To my mind that is probably the best value added. Iwould put ethics as the Ethical Value Added, which is probably the most important

value, added that a CEO (Chief Executive Officer) could gift to his corporation. And ifhe does, then the other EVA (Economic Value Added) and the MVA (Market Value

Added) to my mind will follow. Thank you for having me here once again and giving

me an opportunity to share some views with you. Thank you very much.