For a change, rather than public sector banks, the focus is on the governance of two private sector banks. There are many unanswered questions on role of their chief executive officers (CEOs) and boards. Indeed, these are tough times for directors of these banks. While issues at ICICI Bank relate to alleged conflict of interest of its CEO, at Axis Bank, the issue relates to alleged non-performance of its CEO. Unfortunately, in both cases, stakeholders only have half-baked information, not complete facts, and hence cannot make any conclusion.

The events at ICICI Bank raise the issue of conflict and its resolution, sufficiency of probe by the board, and its issuing a clean chit versus the demand for independent probe and the continuation of the CEO. For critics, in case of conflict, recusal is the remedy.

The CEO not chairing the credit committee that sanctioned the Videocon loan is eyewash. A recusal at best is a cosmetic solution. If the board is weak, it will still toe the line of the powerful, notwithstanding the recusal, and if it is strong, it will care a damn if the conflicted person was present.

The call for an independent probe when the board had given a clean chit is another prickly point. This demand reflects how little one believes in the board’s independence. Can we believe independent agencies? Their track record isn’t glorious either. Satyam got Maytas valued from an independent agency. Do we rely on balance sheets certified by so-called independent auditors? N.R. Narayana Murthy doubted not one but multiple independent probes in case of Infosys’s acquisition of Panaya and high severance package to top employees.

Why is there so much doubt? Is it because the finding does not conform to expectation or it does not reflect the truth? At least, in the ICICI case, the jury is not yet out.

Should the CEO continue or not is a personal choice. Yet, for an upright person, being shunted out is a matter of reputation.

However, these are the risks you carry when in high office. Caesar’s wife must be above suspicion, but does that mean that the spouse of a successful CEO cannot pursue his/her profession? Is the board secretive? Adequate transparency is somewhere between secrecy and nakedness and one doesn’t know the right point. Whether the board is transparent or secretive will be known only after the truth is out.

The Axis Bank issue raises questions on the board’s competence, independence and evaluation, and the role of the Reserve Bank of India. These events force one to conclude that all prescriptions of good governance are a farce. Otherwise, how can an independent board, having all performance details of its CEO, evaluate her and recommend reappointment, and then succumb when RBI finds otherwise?

While at least in theory, a graceful compromise has been arrived at by the CEO asking that her term be curtailed, in practice, no one will buy this argument. It very clearly reflects that the board is either succumbing to the pressure of RBI or convinced that their decision was wrong. Both reflect poorly on the board.

Did the board believe earlier that the current CEO was the best despite negative performance? If yes, why has it accepted the CEO’s request now?

Or did RBI open its mind, activate its thinking machinery and members realized that the CEO needs to be changed? Why should the board accept RBI’s diktat if it believed in its CEO choice? Can the board not confront RBI? Is there two-way communication between regulator and regulated, or is it in the form of diktats only, or is it a way to put an end to uncomfortable questions?

Lawmakers thought that the answer to all ills was independence. However, most often, it is found that board members are mesmerized by the aura of the CEO or owe their existence to someone’s benevolence. Evaluation is an exercise for mutual maximization of brownie points, making it an exercise in futility. Things will change only when independence is not just a label but a trait of one’s character. Good governance will have to wait till then.

J.N. Gupta is co-founder and managing director of Stakeholders Empowerment Services, a corporate governance research and proxy advisory firm.