Change in Scenario in Corporate Governance in Banking Sector in India

Abstract

In India, in recent years, the word governance is fast approaching a point of semantic saturation and at the same time gained significant momentum in every sector with more so in corporate and banking. Besides that lot of reforms has become necessary for the development of corporate and banking sector. Indeed, corporate governance is an important factor to tap capital market in international market and facilitates a foreign investor to acquire stakes in Indian companies. There is also an impact of reputation and long term sustainable in business due to the factors such as business ethics and corporate governance. For good corporate governance, no such single model is available. But OECD has identified some common components which emphasis on corporate governance based on the work carried out in Member countries. A separate and distinct study on corporate governance and shareholder enrichment are scanty, there is a need for a comprehensive study on corporate governance, corporate growth, and its impact on shareholder enrichment. The present study is thus an attempt to analyze the concept of corporate governance in banking in India. The objectives are to examine and analyze the recent trends in corporate governance practices in India, to evaluate the integrity and behavior of selected performance, to measure the impact on banking growth and relationship after globalization. This study also investigates Rights, Roles and Responsibilities of all the stakeholders. To keep the primary of the Board of Directors and their role in complying with various legal framework, the Reserve Bank of India has emphasized the importance of corporate governance in the Banks by various measures. This study investigates the steps taken by RBI in setting up audit committees. In the final analysis, all aspects of the management of banking (including compliance) are corporate governance issues. This means that if a bank’s financial firm behaves perilously then it indicates a symptom of poor corporate governance. This study also provides empirical evidence about the differences in the role of the stock market and financial performance measures in the two sectors of Banking and Non- Financial firms.