With Satyam scandal and the ban on Wipro by the World Bank driving away potential customers, a study highlighted the need for close monitoring of family-run businesses in India.
With Satyam scandal and the ban on Wipro by the World Bank driving away some potential customers, an Asian Development Bank-sponsored study on Monday highlighted the need for close monitoring of family-run businesses in India.
"The Satyam scandal in India highlights the need for sound enforcement of more rigorous accounting standards. A particular area for close study is monitoring of family-run businesses," said the ADB report on Impact of Global Economic Slowdown on South Asia.
It said the recent bad press from India following the scandal surrounding Satyam Computer Services and the business ban on Wipro by the World Bank would have driven away some potential customers.
The suggestion by ADB report came as Satyam Computer Services fell into a rough weather after its founder chairman B Ramalinga Raju confessed to fudging of accounts. To revive the company, the Government dismissed its board and replaced it with a new one. The new board is currently in the process of finding a strategic investor.
Also, India's third largest software exporter Wipro was recently debarred for four years from doing business with the World Bank on charges of offering improper benefits to the Bank staff.
To bring home the point of poor standards of regulatory practice in South Asia, the ADB report referred to a recent ranking of the nations by the World Bank on the basis of business environment.
India ranked fifth among the six nations in South Asian countries in terms of Ease of Doing Business and 122nd in the world.
The ADB report said high levels of corruption in South Asia cannot be eradicated immediately.
"But the movement to fight corruption needs to gain more momentum. First path of eradication should focus on channelling corruption and limiting it to only certain areas," it said.
Corruption and related malpractice have become established as a normal state of affairs and can only be expunged through better training and stricter enforcement, the report added.
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