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A study of the role of Corporate Governance in Indian banking sector


For the sustainable and success growth of any country depends upon the proper utilisation of resources. It begins with the vast use of natural resources strategic, geographical location, human resources and intellectual capital. Private participants play a prominent role in utilisation of these resources. But public administration will play a important role in sustainable development of the society. It helps to maintain peace, discipline, planning, education and implementation in the society which depends upon the culture and nature of the society. An efficient public governance system with helps to build a good and potential culture and society.

As a public governance is to protect human values and rights, it implementation of laws in non discriminatory manner.An effective , impartial and quick judicial system. Transparent public agencies and official decision making, accounting for decision made for public issues and resources by public officials and division making power to local levels and bodies in rural and urban areas, participants and inclusion of all citizens in debating public policies and choices.

1.2. Corporate governance meaning

Keeping in the view the interest of various stakeholders in a company, corporate governance is concerned with effective management of relationships. It requires the formulation of the value framework, the ethical framework and the moral framework which will guide the decision making process.

1.3 Corporate Governance Norms

Corporate governance are the policies, procedures and rules governing the relationships between the shareholders, stakeholders, directors and managers in a company, as defined by the applicable laws, the corporate charter, the company’s bylaws, and formal policies.

Primarily it is about managing top management, building in checks and balances to ensure that the senop’;;
Executives pursue strategies that are in accordance with the corporate mission. It consists of a set of processes, customs, policies, laws and institutions affecting the way of a corporation is directed, administered or controlled. Corporate governance governs the relationship among the many players involved (the stakeholders) and the goals for which the corporation is governed.

1.4 Origin of Corporate Governance

“Corporate Governance” concepts takes its first step in the US in the year 1970. The subject of Corporate Governance become the subject of debate all over the world and given the fact that corporate governance has been with us since the usage of corporate form which has created possibility of conflicts between the owners and management.
A Joint Stock”The British East India Company” was one of the first companies in the early 1600. It was oriented towards to favour the trading rights in India. In the earlier days, ownership of the company divided among a few individuals and those were being the active members of the company’s board of directors. And the company was restricted to transfer the ownership as there were not having any organised markets, and therefore the shares of the company were only transferred to friends or relatives.

1.5 History of Corporate Governance

Corporate governance concept emerged in India after the second half of 1956 due to the economic liberalisation and deregulation of industry and business…Need for Corporate governance arises due to separation of management from the ownership. For a firm success, it needs to concentrate on both economical and social aspects.

1. 1956- Companies Act: Limited governance and disclosure standards.
2. 1992- Formation of Securities and Exchange Board of India.
3. 1998- Confederation of Indian Industry.
India’s largest industry and business association comes up with the first voluntary code of corporate governance.
4. 1999- SEBI sets up a committee for good corporate governance under Kumar Mangalam Birla.
5. 2000-SEBI ratifies the committee key recommendations and integrates them in clauses 49 of the Listing Agreement.
6. 2002- Establishment of the Naresh Chandra committee to examine various governance issues
7. 2006 Revision of clause 49
8. 2008 introduction of the Companies bill
9. 2011 Reintroductions of the revised Companies bill after Satyam scandal.

1.6 Corporate Governance Pillars(Principles)

Corporate Governance principles are the base of rules and guidelines set for the Corporate.


Disclosure of the financial and non financial information of the company in timely and accurate manner is necessary. It enables the stakeholders to know day to day activities and their rights in the company.

2. Accountability:

The person’s like managers, directors, chairmen and other offers should be accountable to other stakeholders of the company which ensures the liability of the person to take interest of the others.

3. Independence:

Board of directors must operate without interference of any interested party in the company, Independence of top manager is important for smooth and efficient functioning of the company.


Shareholders Rights
Treat all shareholders including minority equally
Provide effective redressal.
1. Board have fiduciary duty towards shareholders, must ensure that the management decisions is aligned with shareholders interests.
2. Corporate governance will become increasingly user friendly as shareholders
Gain more real time information.
3. It is only through the powerful combination of people and technology that

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