Corporate Governance in Indian Banks
Although the subject of corporate governance has received a lot of attention in recent times in India, corporate governance issues and practices by Indian banks have received only a scanty notice.
The question of corporate governance in banks is important for several reasons:
First, banks have an overwhelmingly dominant position in developing the economy s financial system, and are extremely important engines of growth.
Second, as the country’s financial markets are underdeveloped, banks in India are the most significant source of finance for a majority of firms in Indian industry.
Third, banks are also the channels through which the country’s savings are collected and used for investments.
Fourth, India has recently liberalised its banking system through privatisation, disinvestments and has reduced the role of economic regulation and consequently managers of banks have obtained greater autonomy and freedom with regard to runnnig of banks.
This would necessitate their observing best corporate practices to regain the investors’ confidence now that the government authority does not protect them anymore.
Corporate governance in banks has assumed importance in India post-1991 reforms because competition compelled banks to improve their performance.
Even the majority of banks and financial institutions, owned, managed and influenced by the government with neither high quality management nor any exemplary record of practising corporate governance have realised the importance of adopting better practices to protect their depositors and the banking public
Although the subject of corporate governance has received a lot of attention in recent times in India, corporate governance issues and practices by Indian banks have received only a scanty notice.
The question of corporate governance in banks is important for several reasons:
First, banks have an overwhelmingly dominant position in developing the economy s financial system, and are extremely important engines of growth.
Second, as the country’s financial markets are underdeveloped, banks in India are the most significant source of finance for a majority of firms in Indian industry.
Third, banks are also the channels through which the country’s savings are collected and used for investments.
Fourth, India has recently liberalised its banking system through privatisation, disinvestments and has reduced the role of economic regulation and consequently managers of banks have obtained greater autonomy and freedom with regard to runnnig of banks.
This would necessitate their observing best corporate practices to regain the investors’ confidence now that the government authority does not protect them anymore.
Corporate governance in banks has assumed importance in India post-1991 reforms because competition compelled banks to improve their performance.
Even the majority of banks and financial institutions, owned, managed and influenced by the government with neither high quality management nor any exemplary record of practising corporate governance have realised the importance of adopting better practices to protect their depositors and the banking public