the need to have appropriate human resource, are significant, and, therefore, require appropriate management controls and accountability framework under a watchful board. regulations and laws do contribute, but do not constitute the whole story about governance, as recent global events have shown. governance landscape, including it governance, has much more to be covered by quality of board oversight than mere compliance with the written word. good governance should be, and is often, the result of endogenous factors those that emerge from within, not without. governance is not about what decisions get made – that is management – but it is about who makes the decisions and how they are made. independent directors, with an assumption of higher level of objectivity and professionalism, are expected to guide the banks in a manner that our banks as well as customers reap the fruits of it deployment while the risks are contained through appropriate assessment and mitigation measures. aristotle said “ it is better for a city to be governed by a good man than good laws ”. board and its directors can contribute towards governance, including it governance, more than the law under which it is constituted, and that is what is expected of them. in conclusion, i would exhort the independent directors to perform their role at a level expected of them, so as to benefit the industry, economy and society and once again convey my thanks to idrbt for organizing the program. i wish the program great success. thank you. references : ei sawy, omar a ; pavlou, paul, a : it enabled business capabilities for turbulent environments filatotchev, i – corporate governance and firms dynamics : contingencies and complementarities, journal of management studies group of thirty : toward effective governance of financial institutions itgi : board briefing on it governance parent, m ; b. h. reich – governing it risk : california management review bis central bankers ’ speeches picou, a ; rubach, mj – does good governance matter to institutional investors richard briesbois, greg boyd, ziad shadid ; office of the auditor general of canada – what is it governance? and why it is important for the is auditor shailer, gep : an introduction to corporate governance in australia syaiful ali, peter green, michael parent – the role of compliance in information technology governance weill, p ; ross j. w. : it governance : how top performers manage it decision rights for superior results – hbs press bis central bankers

layers of committees, each layer works independently of the others, and the meetings of the committees are attended by observers from international financial institutions. this will assure the intensity of the evaluation and add transparency to the whole process. ( iv ) among those to be evaluated by the committees, aside from the workability of the business plans, the ‘ fit and proper ’ of the management and the controlling owners of the banks is a very important and determining aspect. this process will leave out bad managers as well as bad and improper controlling owners from the post - restructuring banking sector of indonesia. it has been on the basis of the principles i cited earlier that we run our bank recapitalization program to recapitalize those banks that we believe have a viable future together with the decision to liquidate those banks that were not viable. following an assessment by international auditors of the banking sector, we have classified each bank into one of three categories. so - called category a banks have a capital adequacy ratio of 4 % or more. category b banks are those with a capital adequacy ratio of less than 4 % and more than minus 25 %. category c banks are the residual. on 13 march 1999 the government took a decisive step towards restructuring the private domestic system and bringing it back to financial health : 38 banks – all 17 private category c banks and 21 category b banks – have been closed as they were considered deeply insolvent and as having no prospect of regaining financial viability. seven large category b banks with extensive branch networks have been taken over by the government in the public interest to minimize disruption to the payments system. these seven banks will be restructured speedily to improve their financial performance and prepared for later privatization. nine category b banks have been determined as eligible for recapitalisation by the government to bring them to the minimum capital requirements. several committees and international consulting firms have assessed the better financial positions, quality of management and future prospects of these nine banks. their owners have, however, until april 21, 1999 to inject at least 20 % of the banks ’ capital requirements, the government providing the remaining capital in the form of bonds. finally, 73 category a banks have met bank indonesia ’ s minimum capital adequacy standards and can compete without any public financial assistance. these category a banks will be reviewed regularly to ensure they remain in good financial health and continue to observe all rules and regulations, focusing on three main criteria : their business plans, the ‘