A series of resignations by auditors in the last few months is worrying investors about corporate India’s governance standards. But former chairman of the Securities and Exchange Board of India (SEBI), M Damodaran, in an interview with Moneycontrol.com, says the situation may not be as bad as it is being made out to be.

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Here are some of the key highlights of the interview:

Damodaran said that rules and regulations are not the answer to rectify the inaction or violations by company boards.

"It is better enforcement, better surveillance and exemplary punishment. What Sebi needs to do is hire more lawyers and accountants so that it becomes easier and faster to deal with issues,” Damodaran told the news website.

Recently, the fair market conduct committee recommended that the regulator should seek direct power to intercept calls against the market manipulators. On therecommended powers to Sebi, Damodaran said that the regulator can do without it.

On insider trading, Damodaran said that it can never be fully eliminated as some will always have more information than the others.

"You cannot go after 100 percent of the offenders. But you can hand out severe punishments so that people think ten times before they try to game the system," he said.

Onrising bad loans and the state of the public sector banks, he feels that they are beyond repair. However, he suggests that a good hiring system, a good chief executive officer and a board with reliable and credible people are the only ways the banking sector can come out of the mess.

Damodaran’s suggestions for fixing the mess at PSU banks:

“Have a good hiring system in place. You can’t have a prospective bank head be interviewed by ex-officio persons, some of whom have no idea how the banking sector works.

The committee on fair market conduct recommended that Securities and Exchange Board of India (Sebi) seek direct power to intercept calls to strengthen their case against market manipulators. The Central Board of Direct Taxes has this power. Damodaran feels SEBI can do without such a power.

“The problem with SEBI is not of inadequate powers. It is among the few regulators which has legislative, executive and judicial powers. The question to be asked is if you want to give it additional powers such as the right to tap telephones and the like. Where will you draw the line?", questioned Damodaram.