Corporate Governance and the Performance of Banks in India

Banks, in a broad sense, are institutions whose business is handling other people’s money. Banks are thus a critical component of any economy.The new concept of governance is to bring about quality corporate governance and not only a necessity to serve the divergent corporate interests, but also is a key requirement in the best interests of the corporate themselves and the economy.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 by the government do not have the track record of practicing corporate governance principles. Another important issue is how effective the corporate governance disclosure and practices are followed in banks. The board of directors and its sub committees play a vital role in banks for decision making and effective management. So there is necessity to study the role of board of directors and performance of banks.