Corporate Governance in Banks of India

While the emphasis on governance of the state is an outcome of post Watergate scandal, regulatory and legislative developments of mid-seventies in the USA and the stress on corporate governance (CG) is because of the loss of wealth of corporate and bank shareholders of UK in early nineties. So, the failure of governance at the level of State and within the corporate renewed the interest in management affairs of institutions and establishments, not only in developed countries but also in many developing economies. Following the path of developed economies, the government reforms were undertaken by developing economies, like South Korea, China, India, Brazil, Russia etc., through the measures of liberalization and privatization. This article tries to examine the CG development in India in general and policy prescriptions and their implementation in banking particular. Also an attempt has been made to highlight the CG response from the central banker of the country to the current global financial crisis. Apart from this introductory section, the rest of the write-up is placed under four separate sections. The following section briefly describes the development of CG in India. The third section, which is the main body of this article, specifically deals with the CG mechanism in Indian banks. The CG response to the global financial crisis is examined in the fourth section. The last section brings out the observations and conclusions