India's Stewardship Codes: Box Ticking, Not Real Change?

In India, mandatory stewardship codes for Mutual Funds (MFs) and Alternative Investment Funds (AIFs) have been in place for five years. While the nation has achieved significant procedural compliance with these codes, there is a noticeable lack of tangible improvement in governance outcomes. This has led to persistent concerns within the capital markets.

Recent events, including promoters selling shares shortly after prominent Initial Public Offerings (IPOs), have brought these issues to the forefront. Questions about whether companies are maintaining valuation discipline and the credibility of promises made at the time of listing are now being widely discussed. These concerns directly relate to the role of institutional stewardship.

However, the institutional response to these governance lapses has been largely formulaic. Standard disclosures have been issued, indicating a superficial engagement rather than a profound influence on corporate governance practices. The gap between public enthusiasm during IPOs and insider actions post-listing highlights an ongoing challenge in the Indian financial sector.