Sushma S n123

CORPORATE GOVERNANCE IN FINANCIAL INSTITUTION
CHAPTER-1:
INTRODUCTION
KLE’S SHRI MRITYUNJAYA COLLEGE OF ARTS, COMMERCE & POST GRADUATE STUDIES IN COMMERCE, DHARWAD Page 1
1.1 INTRODUCTION:
The project report on “A STUDY OF CORPORATE GOVERNANCE IN CASE OF FINANCIAL

INSTITUTIONS” had under taken at four financial institutions. It is done with an objective to
analyze the director’s report of last 5 year and to study the director’s report of the
institution. Director’s report provides summarized view of board of directors, board of
structure, strength and size and committees of board. Analysis of directors report predict the
integrity and ethical behavior in the institution
Banks practicing good corporate governance in the traditional, shareholder-oriented

style fared less well than banks having less shareholder-prone boards and less shareholder
influence. The special governance of financial institutions is firmly embedded in any
supervisory law and regulation. Most recently there has been intense discussion on the
purpose of (non-bank) corporations. For banks stakeholder governance and, more
particularly, creditor or debt holder governance is more important than shareholder
governance. The implications of this for research and reform are still uncertain. A key
problem is the composition and
The great significance of corporate governance is highlighted by James D.

Wolfensohna, former President of World Bank, as follows – “The governance of the
corporation is now as important to the world economy as the government of countries”.
Corporate governance has a vital role in strategic management. Good governance

fortifies the corporate mission and philosophy, ensures compliance with government
regulations and societal norms and fosters efficiency, fairness and transparency in
management. Tired by turbulence in the corporate sector, characterized by corporate
failures, frauds and rampant unfairness in the conduct of business and governance in general,
corporate governance has become a subject of serious and frequent discussion across the
world since the early 1990s. Because of the critical role of corporate governance in fostering a
healthy corporate sector, governments in India and across the world have laid down
frameworks for the corporate to adhere to.
As the Task Force on Corporate Governance constituted by the Confederation of

Indian Industry (CII) under the Chairmanship of Rahul Bajaj, observes, “corporate governance
goes far beyond company law. The quantity, quality and frequency of financial and
managerial disclosure, the extent to which the board of directors exercise their fiduciary
responsibilities towards shareholders, the quality of information that management share with
their boards, and the commitment to rim transparent companies that maximize long-term
shareholder value cannot be legislated at any level of detail. Instead, these evolve due to the
catalytic role played by the more progressive elements within the corporate sector and, thus,
enhance corporate transparency and responsibility.”
The corporate governance of directors of banks and financial institutions was

constituted by Reserve Bank to review the supervisory role of boards of banks and financial
institutions and to get feedback on the activities of the boards vis-à-vis compliance,
transparency, disclosures, audit committees, etc. and provide suggestions for making the role
of Board of Directors more effective with a perspective to mitigate or reduce the risks.
Absence of a generally well accepted corporate governance framework consisting of a

regulatory system and a system of principles and guidelines was, inter alia, a deterrent to the
development of standard corporate governance practices. It is, therefore, not surprising that
the last few decades or so has witnessed a number of committees/task forces at the national
and international levels, appointed by governments, industry organizations, regulatory
bodies, international organizations, etc., to recommend regulatory measures and principles
for corporate governance.
OBJECTIVE :
The following are the main objective of the study
1. To know the study of good corporate governance in financial institutions

2. To understand how best organization could be manage and benefit from the sound
corporate governance
3. To know the size of board of directors
4. To study and analyze the impact of corporate Governance on the company
5. To bring out the findings and suggestions analysis done
SCOPE OF THE STUDY:
 collecting the data on the basis of secondary data like company websites and annual
statements of the company

NEED OF CORPORATE GOVERNANCE
The studies mainly conducted to know corporate governance practices on the financial
institutions such as state bank of India, Punjab national bank, ICICI bank and Axis bank
Corporate governance is the set of processes, customs, polices, laws and institutions affecting
the way a corporation is directed administered or controlled
RESEARCH METHODOLOGY
Research methodology is a systematic way to solve a problem. It is a science of

studying how research is to be carried out. Essentially, the procedures by which researchers
go about their work of describing, explaining and predicting, phenomena are called research
methodology. It is also defined as the study of methods by which knowledge is gained. Its aim
is give the work plan of research.
The study on the basis of secondary data such as official websites of company and annual
reports of the company
LIMITATIONS OF THE STUDY:
 The study is only depend upon secondary data only

 This study is limited to past five year annual reports only
CHAPTER 2
CONCEPTUAL FRAME WORK
CORPORATE GOVERNANCE :
Corporate governance has been widely recognized for the success of corporations in
the business environment. This has been in limelight when the number of scandals, such as
Enron, Parmalat, WorldCom or Lehman Brothers, came into picture and significant essence
has been felt worldwide for effective corporate governance. Corporate governance practices
need to be constantly evaluated against the backdrop of an increasingly uncertain and
complex business environment. Globally, there has been much debate on what constitutes
good governance? Governance norms have primarily focused on the higher responsibilities,
tighter regulation for the board of directors and the increase in shareholder activism. There is,
however, no standard metrics to determine the success of corporate governance practices.
The mandatory checklist approach for corporate governance has severe limitations in terms
of its effectiveness. Similarly, relying entirely on an overarching set of principles without any
binding rules has also its shortcomings.
Recently, many countries have opted for a middle path approach, where key for
success is recognized by way of ‘comply-or-explain’ governance code, which is rational too, as
it ensures that companies adhere to basic codes and standards. For the long-term interests of
the stakeholders, it provides flexibility and accommodates new ideas. This approach
encourages companies to be more transparent, as any deviation needs to be publicly
explained. Ultimately, long-term sustainability of companies depends on how strong the
conviction is to continuously strive in adopting better governance practices. While the
business environment may undergo radical change, the underlying principles of transparency,
integrity and accountability must remain steadfast. Good Corporate Governance practices are
an integral element of business. It is not just a pre-requisite for facing intense competition for
sustainable growth in the emerging global market scenario but is an embodiment of the
parameters of fairness, accountability, disclosures and transparency to maximize the value for
the stakeholders. Corporate Governance is about commitment to values, ethical business
conduct, and contribution towards social causes and considering all stakeholders‟ interest in
the fair conduct of business.
Effective corporate governance is recognized as an important tool for the risk

management and the socioeconomic development, which is possible by ensuring the
economic efficiency, growth and stakeholder confidence. This can be well recognized, while
analyzing the seeds of modern corporate governance, which were most probably sown by the
Watergate scandal in the US, resulting in subsequent investigations, where the US regulatory
and legislative bodies able to pinpoint control failures, which had allowed many of the
corporations to make illegal political contributions. This led the enactment of the Foreign and
Corrupt Practices Act of 1977 in USA that focuses the specific provisions for the
establishment, maintenance and review of internal control systems.1979 was recognized year
for the Securities and Exchange Commission of US, which made mandatory reporting on
internal financial controls. In 1985, following a series of high profile business failures in the
USA, the most notable one of which being the Savings and Loan collapse, the Tread way
Commission was formed with its primary role to identify the main causes of
misrepresentation in financial reports and to recommend ways of reducing incidence thereof.
The Tread way report published in 1987 highlighting the need for a proper control
environment, independent audit committees and an objective Internal Audit function. It
called for published reports on the effectiveness of internal control and requested the
sponsoring organizations to develop an integrated set of internal control criteria to enable
companies to improve their systemic measures. Accordingly Committee of Sponsoring
Organizations (COSO) was setup and its report in 1992 specified a control framework, which
has been endorsed and refined in the subsequent UK based committees reports, namely
Cadbury, Rutteman, Hampel and Turnbull. When the developments in the United States
stimulated debate in the UK, a spate of scandals and collapses in that country in the late
1980s and early 1990's led shareholders and banks to worry about their investments. These
also led the UK government to recognize that the existing legislation and regulations were
ineffective. Companies including the BCCI, British & Commonwealth, Polly Peck and Robert
Maxwells Mirror Group News International were victimized as the boom-to-bust in decade of
the 1980s. Some companies, which saw impressive growth in earnings, were ended the
decade in a memorably disastrous manner. These spectacular corporate failures arose
primarily for a nominal reason of poorly managed business practices. It was an attempt to
prevent the reoccurrence of such business failures, the Cadbury Committee, was set up by
the London Stock Exchange in May 1991, under the chairmanship of Sir Adrian Cadbury. The
committee, consisting representation from the top levels of British Empire, was given the
task to draft a code of practices to assist corporations in UK by defining and applying
effective internal controls to limit their exposure to financial losses.
MEANING, DEFINITION AND FEATURES OF CORPORATE GOVERNANCE:
Corporate Governance refers to the way a corporation is governed. It is the technique

by which companies are directed and managed. It means carrying the business as per the
stakeholders’ desires. It is actually conducted by the board of Directors and the concerned
committees for the company’s stakeholder’s benefit. It is all about balancing individual and
societal goals, as well as, economic and social goals.
Corporate Governance is the interaction between various participants (shareholders,

board of directors, and company’s management) in shaping corporation’s performance and
the way it is proceeding towards. The relationship between the owners and the managers in
an organization must be healthy and there should be no conflict between the two. The
owners must see that individual’s actual performance is according to the standard
performance. These dimensions of corporate governance should not be overlooked.
Corporate Governance deals with the manner the providers of finance guarantee
themselves of getting a fair return on their investment. Corporate Governance clearly
distinguishes between the owners and the managers. The managers are the deciding
authority. In modern corporations, the functions/ tasks of owners and managers should be
clearly defined, rather, harmonizing.
Corporate Governance deals with determining ways to take effective strategic

decisions. It gives ultimate authority and complete responsibility to the Board of Directors. In
today’s market- oriented economy, the need for corporate governance arises. Also, efficiency
as well as globalization is significant factors urging corporate governance. Corporate
Governance is essential to develop added value to the stakeholders.
Corporate Governance ensures transparency which ensures strong and balanced

economic development. This also ensures that the interests of all shareholders (majority as
well as minority shareholders) are safeguarded. It ensures that all shareholders fully exercise
their rights and that the organization fully recognizes their rights.
Corporate Governance has a broad scope. It includes both social and institutional
aspects. Corporate Governance encourages a trustworthy, moral, as well as ethical
environment.
DEFINITIONS :
The great significance of corporate governance is highlighted by a former President

of World Bank, as follows – “The governance of the corporation is now as important to the
world economy as the government of countries”.
FEATURES OF CORPORATE GOVERNANCE :
1. Strategy Setting and Planning:

Planning is a critical element of good governance. For most disability services, it is
appropriate to combine strategic and vocational planning with the business planning process.
The important issue is to ensure the overall strategy setting and planning for the organization
is clearly documented and communicated.
Some points for good planning include:
(i) The Board should establish the goals for the organization, in conjunction with
management, to provide the framework for planning
(ii) The plan should be ‘owned’ by the organization
(iii) Active involvement of Board members and management is critical
(iv) Consultation with key stakeholders should include employees and consumers. It is also
important to consult with funding bodies and key community contacts
(v) Assistance from a specialist facilitator (this can have great benefits, but care must be
taken to ensure that the role is kept to facilitation and that the plan does not become
‘owned’ by the facilitator)
The importance of good planning is that it helps the organization clearly set the
objectives, strategies and actions for a period. It also provides a means to monitor the
organization’s performance. To allow for changing circumstances, the plans should be
regularly reviewed and updated.
2. Risk Management:
Risk management is a concept that has gained significant publicity in recent years. It is
a very important concept in the management of organizations. The Board should consider
whether it has a clear risk management framework that covers the organization’s operations.
Risk should be thought of in terms of what, and how, losses (or gains) may affect the
organization through a wide range of sources.
Whilst the Board does not have a direct responsibility for risk management it does
have a responsibility to ensure that managers and staff of the organization have an
appropriate risk management framework in place to mitigate or reduce risks that have been
identified.
There needs to be an ongoing process to identify risk, assess its impact and take
treatment actions to address and/or monitor risk. There should be a reporting process to the
Board by management on the emergence of new risks and the treatment of those risks.
3. Consultation:
Within a successful disability services organization, consultation with key stakeholders
is an essential feature of good governance. It enables the stakeholders to understand the
organization’s objectives and strategies and helps them to work with the organization in
achieving those objectives.
Effective consultation helps to create an environment of mutual respect and trust.
Working with the stakeholders as far as practical, rather than against them, maximizes the
benefits of the relationship.
Who are the Organization’s Stakeholders :
They may include the funding agencies, local government, and the community within
which you operate, businesses you deal with, for example, customers, suppliers or businesses
where consumers are placed, staff members, etc.
You should have a policy on how you consult with stakeholders.
This policy should:
(i) Include a communication strategy;
(ii) Identify who should consult on behalf of the organization with each stakeholder;
(iii) Establish what Board involvement in such consultation should occur with each
stakeholder;
(iv) Include events that should be communicated to stakeholders; and
(v) Identify the frequency and format of ongoing consultation and communication
4. Roles and Responsibilities:

The organization should develop documented policy describing the roles and
responsibilities of the Board, of individual Board members and of management. The policy
should be clearly communicated and understood by the Board, management, staff,
consumers and members of the organization.
5. Skills, Independence and Resources:

The Board should have the right mix of skills to manage the organization’s affairs.
These skills should cover key functional areas such as- Business acumen/expertise, finance,
marketing, production or service management, legal, etc.
As an individual Board member it is difficult to have the expertise across all these
areas. If achieving this mix of skills on the Board is difficult then the organization can consider
accessing professional people to provide advice on certain matters.
It is also important to have a mix of people on the Board, including those who are
independent of the organization. As such, these people should not be members or have a
direct interest in the affairs of the organization. The reason for this is to provide a- balanced,
objective representation on the Board. This should assist in ensuring that the Board does not
make decisions purely on an emotive basis.
6. Conduct and Ethics:

The tone set by the Board member or management, has a major influence on the
organization’s integrity, ethics and values. If staff and consumers see the top level acting
ethically and with integrity, this sets a tone in the organization that these attributes are
valued.
In setting a standard that you expect people in the organization to work to, it is very
important that a code of conduct be established, which covers the Board members,
management and staff.
The code of conduct should be developed with management and staff and should
cover such things as:
(i) Principles of responsibilities and duties of Board members, management and staff;
and
(ii) Guidance for interpreting the principles
7. Performance:
A means of assessing the performance of Board members should be in place. Given
that members of Boards are largely volunteers, the nature of the performance measures and
reporting should not be overly oppressive and onerous. On the other hand, it is important to
have in place some formal means of establishing an expected level of performance and to
assess if it is being achieved.
An important aspect in developing a performance measurement framework is the
definition of the roles of each Board member. From that, the expectation of their contribution
may be determined and a means of performance measurement established.
8. Succession Planning:
At some point in the future a successor will be required to continue the management
of the organization. If possible, the current manager should be responsible for grooming
other senior staff as potential successors.
However, if the organization does not have access to these resources, the Board
should be aware of this risk and review it and act accordingly. The selection of a business
manager, whether internally or externally, should be based on specific selection criteria. This
is to ensure that, when required, a successor is appointed based upon their qualifications,
experience and suitability for the role.
9. Financial and Operational Reporting:

Timely financial and operational reporting is important in ensuring that organization’s
performance is accessible so as to assist in decision making. Reporting should also enable

assessment of the performance of the management and staff. Therefore, reports should
incorporate not just actual achievements, but projected or budgeted targets that should have
been achieved.
Reporting needs to be comprehensive enough to ensure that you are well informed,
but not so complex that it confuses the key issues being reported. The Board should establish
an agreed format for reporting to ensure that all matters that should be reported are
reported.
10. Audit Committees:

An audit committee’s role is to assist the Board in fulfilling its oversight responsibilities
for the financial reporting process, the system of internal control over financial reporting, the
audit process, and the organization’s process for monitoring compliance with laws and
regulations.
For larger organizations, an audit committee of non-executive (independent) Board
members can be useful in considering audit related issues in more depth than would normally
be undertaken by the full Board. However, the audit committee should not act as a barrier
between the auditor and the full Board or presume to overtake the functions of the full
Board.
1.2 OBJECTIVES OF CORPORATE GOVERNANCE
Good governance is integral to the very existence of a company. As it inspires and

strengthens the investor's confidence by ensuring company's commitment to the higher level
of growth and profits.
It seeks to achieve following objectives:
(i) A properly structured board capable of taking independent and objective decisions is
in place at the helm of affairs.
(ii) The board is balance as regards the representation of adequate number of non-
executive and independent directors who will take care of their interests and well-
being of all the stakeholders.
(iii) The board adopts transparent procedures and practices and arrives at decisions on
the strength of adequate information.
(iv) The board has an effective machinery to take care and manage the concerns of
stakeholders.
(v) The board keeps the shareholders informed of relevant developments impacting the
company.
(vi) The board effectively and regularly monitors the functioning of the management team
(vii) The board remains in effective control of the affairs of the company at all times.
The overall Endeavour of the board should be to take the organization forward so as
to maximize long term value and shareholders’ wealth.
WHY IS CORPORATE GOVERNANCE IMPORTANCE?
1. Ensuring integrity and ethical behavior in the company.

2. Ensuring that all shareholders are treated equitably.
3. Ensuring that the board has sufficient relevant skills and understanding to review and
challenge management’s performance and actions and to provide oversight and advice to
management.
4. Ensuring full disclosure and transparency to all stakeholders of the company, including the
reporting of financial information.
5. Considering and balancing the interests of all stakeholders, including those to whom the
company has legal, contractual, social, and market driven obligations, as well as to non-
shareholder stakeholders, including employees, investors, creditors, suppliers, local
communities, customers, and policy makers.
SCOPE OF CORPORATE GOVERNANCE:
It refers to how it infl uences the business inside out; generally, its scope is
broader; it encompasses various development factors. It is solely about
maintaining equilibrium between the individual or corporati on and societal goals
and economic and social developmental goals.
ECONOMIC GROWTH
Proper implementati on of corporate governance norms enhances the

country’s economic growth;
1. The regulati ons facilitati ng transparency, accountability, fairness, and equity

in managing the company aff airs internally and externally
2. Boosti ng the confi dence of investors expedite buying and selling of securiti es
which directly infl uences the maintenance of fi nancial market liquidity
3. regulatory authoriti es of the corporati on being professional, competent and

fast in dealings promote market performance
SOCIAL RESPONSIBILITY
The primary objecti ve of implementi ng corporate governance is to

facilitate sustainable growth; the development of a business must encircle body
economic and social development that corporate governance codes enable.
1. It acts as a tool for social constructi on where the companies practi ce both
profi t maximizati on and social welfare, and these practi cal applicati ons
benefi t the growth of social responsibility among corporate.
2. By providing reasonable corporate governance increase investor confi dence
leading to boost investments and income generati on for the society .
BUSINESS EXPANSION AND DEVELOPMENT
An eff ecti ve corporate governance strategy such as maintaining proper

audit of accounts, effi ciency in directors role, the cordial relati onship among
shareholders etc., ulti mately impact business expansion and diversifi cati on.
It is facilitated by;
1. Raising capital at a faster rate because of increased public confi dence level
2. It causes a hike in demand and supply of stocks which refl ects in the stock
price increase
3. Minimize mismanagement inside corporati on helping expansion of business
Increased effi ciency, Lowered illegaliti es and mismanagement
1. Well-regulated internal management with an appropriate number of

executi ve, non-executi ve and independent directors avoid imparti al decision
making
2. All piece of informati on, genuine and relevant are facilitated adequately to
the market parti cipants to miti gate defrauding
3. Transparency in the appointment of executi ves and directors lower illegal and
unfair governance
4. Accountability of the board of directors and other executi ve promote a fair

legal remedy to the aggrieved party
5. Surveillance over the corporati on aff air by outside market players lower
market illegaliti es
NEED FOR CORPORATE GOVERNANCE

The need for corporate governance was felt because of the increasing non-compliance
of the standards related to the financial reporting and accountability by the board of directors
and management which in turn was the reason of the huge losses to the investors of the
company.
Not only in India, but companies around the world were not complying with the
standards of the financial reporting and the fallout of companies like Enron in US and Satyam
in India lead to the emergence and need of corporate governance in India for an enterprise.
As it was said that these companies fall out because of having bad corporate
governance policies or framework and because of the corrupt practices followed by the board
of directors and the management of the said companies and their financial consulting firms.
The fall out of big companies like them was enough to bring about the importance
and need of the corporate governance which is supposed to draw a distinction between the
powers of the management and the board of directors which will set a direction for company
to work in a good governance structure which is the main objective of corporate governance.
The need for corporate governance was also felt to have appropriate and adequate
governance processes and procedures. These processes and procedures of the good
governance structure lay down that management should be free to manage the affairs of the
company and board of directors should be free to monitor and give directions.
The need of corporate governance is also felt as it provides for the better financial
strength of a company by maintaining a competitive environment which further provides for
the financial growth of a company and increased improvement in the accountability system
which results in risk mitigation substantially. Corporate governance policy laid great emphasis
on the transparency and disclosure in the company and provide that if there is transparency
in an organization and if an adequate framework of corporate governance is adopted by the
company then it will minimize the risk of the happening of scams which have been witnessed
by the corporate in the past.
Corporate governance provides for preparing a code of conduct for an organization

which will help the company in showcasing the commitment of the company to work ethically
on the ethical stance and to maintains a good image in market both domestic and global
market.
For having good corporate governance in India the Companies Act, 2013 has
mandated the companies to form the following committees to look after the working and
managing the affairs of company -
 Audit Committee,
 Nomination and Remuneration Committee,
 Stakeholder Relationship Committee, and
 Corporate Social Responsibility Committee.
In India, the need for corporate governance was felt by Securities and Exchange Board
of India (SEBI) as there are various benefits of corporate governance and for this purpose
appointed several committees such as Kumar Mangalam Birla Committee, Naresh Chandra
Committee, and Narayana Murthy Committee.
BENEFITS OF CORPORATE GOVERNANCE:
Corporate governance has a unique and important place for the companies and
different stakeholders. Following corporate governance codes benefits the owners and
managers of companies and increase transparency and disclosure by enhancing access to
capital and financial markets It emphasizes to survive at a crucial period in an increasingly
competitive environment through mergers, acquisitions, risk reduction and partnerships
through asset diversification .Corporate governance ensures to provide an exit policy with a
smooth intergenerational transfer of wealth and divestment of family assets that can reduce
the chance for conflicts of interest .It leads to a greater accountability, better system of
internal control and better profit margins for the company. It also provides higher potential for
future diversification, excessive growth, attracting equity investors (nationally and abroad),
and reduction in the cost of credit for corporations. Corporate governance can provide proper
incentives for the board and management that match the objectives, which are in the interest
of the company and the shareholders. It ensures greater security to the investment of the
shareholders. It creates an environment, where shareholders are sufficiently informed on
decisions concerning fundamental. From various empirical researches, it has been found that
majority of global institutional investors are willing to pay a premium for the shares of a well-
governed company over the other poorly governed companies, which have an impressive and
comparable financial record.
CORPORATE GOVERNACE THEORY
Corporate Governance is a new way of conducting business affairs. Corporate

Governance has become a new dimension to Business management and it presents a new
outlook of the corporate houses and also becomes a desirous part of annual reports. It has
laid a new trust-building among the stake-holders. Ever since India’s biggest ever corporate
fraud and Governance failures in Satyam Computer service limited, the concern about good
corporate governance has increased significantly.
Internationally, the implementation of corporate Governance was exercised phenomenally.
The organization for Economic co-operation and Development (OECD) in 1999

published a paper titled “Principle of Corporate Governance” which defined Corporate
Governance very comprehensively as follows “A set of relationships between a company’s
management, board, its shareholders, and its other stakeholders”.
Corporate Governance is the structural basis of an organization through which the

objectives of a company are marked and the means of obtaining those objectives and
monitoring performance are ascertained. Good Corporate Governance should provide proper
incentives for the board and the management to pursue objectives that are in the interests of
the company and the shareholders and should facilitate effective monitoring, thereby
encouraging firms to use resources more efficiently.
STRUCTURE OF CORPORATE GOVERNANCE
In the Indian Scenario, the term Corporate Governance was first coined by the
Confederation of Indian Industry in 1998 in its paper titled “ Desirable Corporate
Governance: A code" as a voluntary code. Later in 2000 SEBI made it mandatory by
introducing clause 49 to listing agreement following the recommendation of Kumar
Mangalam Birla Committee. At present, the structure of Corporate Governance is prescribed
by the New Companies Act, ICAI accounting standards which are converged with IFRS, SEBI
guidelines.
Every company must adhere to the necessary disclosure requirement as required by
the various Statutes/regulations or regulatory bodies. The structure of good Corporate
Governance must incorporate information as follows:
1. Right of shareholders Corporate:

Must specify the right of the shareholders :
 To attend and participate in the annual general meetings, to elect the board members
and to receive dividend, to avail timely regular and accurate information.
 Right to transfer shares
 To know the capital structure
 Capital control mechanism
 Adherence to one share, one vote standard. International investors and institutional
investors have proxy rights.
2. Equitable treatment of the shareholders:

All shareholders including the minority shareholders must receive equitable treatment
effective redressal for right violations. Prohibition of insider trading and self-dealing.
3. Role of Stakeholders –
 Recognition of their rights as prescribed by law.
 Access to information.
 Building good and produced a relationship with them by the directors or the
management.
 Establishment of effective and enforceable accountability standards.
4. Disclosure and Transparency:
Accurate and timely disclosure of the company’s objective, majority share ownership,
and voting rights; financial and operating results; directors key executives and their
remuneration; significant, foreseeable risk factors; governance structure and practices;
material issues regarding employees and other stakeholders. Annual audits by internal
statutory auditors must be adhered to.
5. Responsibility of the Board of Directors :
Must specify key responsibilities of the board of directors overseeing the process of
disclosure and communication, monitoring the effectiveness of governance practices, and
changing them if necessary. The judgment of directors, independent of management
operation, formation of the board, and their remuneration, etc must be disclosed.
The structure of Corporate Governance in India is a result of many statutory and non-
statutory bodies’ joint efforts. Some of the Contributory to it is named as below :
 Working Group or the Companies act, 1996.

 The confederation of Indian Industry (CII) initiative
 Naresh Chandra Committee Report (2002)
 Kumar Mangalam Birla Committee Report (1999)
 The SEBI’s follow up on Birla Committee Report.
 Taskforce on corporate excellence (NOV,2000)
 Narayan Murthy Committee Report (2003)
 A convergence of Accounting Standard Of India with IFRS which was initiated by ICAI in
April 2011.
 The new Companies act called Companies Act,2013.
MECHANISM OF CORPORATE GOVERNANCE IN INDIA
Broadly speaking, the corporate governance mechanism for companies in India is

enumerated in the following enactments/regulations/guidelines/listing agreements:
1. The Companies Act , 2013 inter alia contains ,provisions relating board constitution ,
board meetings , board processes , independent directors , general meetings , audit
committees , related party transactions, disclosure requirements in financial
statements etc.
The new companies cover the concept of corporate governance in the following way:
 The new act introduces significant changes to the composition of the board of
directors.
 Every company must appoint at least one resident director.
 Nominee director shall not be considered as an independent director anymore.
 The listed companies must appoint independent and women directors.
 The duties of the directors are codified.
The board must constitute its committees as
· Audit committee
· Nomination and remuneration committee
· Stakeholders Relationship committee
· Corporate Social Responsibility committee.
2. Listing Agreement as prescribed by SEBI:- SEBI introduced clause 49 to its listing

agreement in 2000 to give a true and fair view of GCR for the listing companies.
Further SEBI has amended the listing agreement w.e.f. October 1, 2014 to align the
New Companies Act, 2013.
 Board of Directors:- The B.O.D. shall comprise of such a number of minimum

independent directors, as may be prescribed.
 Audit Committee: The audit committee to be set up shall comprise of a minimum of

three directors as members,two-third being independent.
 Disclosure Requirement: Periodical disclosure relating to the financial and commercial
transactions, remuneration of directors etc.to ensure transparency.
 Report and compliance: A separate section in the annual report on compliance with
the GCR, quarterly compliance report to the stock exchange to be signed by CEO/CFO.
 CEO/CFO Certification: To certify to the board that they have reviewed the financial
statement and the same are fare and comply with the laws/regulations and accept
responsibility for the internal control system.
3. Accounting Standard issued by the Institute of Chartered Accountant of India (ICAI):

ICAI is an autonomous body, which issues accounting standards providing guidelines
for disclosure of financial information. Section 129 of the New Companies Act,2013
inter alia provides that the financial statements shall give a true and fair view of the
state of affairs of the companies comply with the accounting standard notified under
section 133 of the companies Act, 2013.
4. Secretarial Standards issued by the Institute of Company Secretaries of India(ICSI):

ICSI is an autonomous body, which issues secretarial standards in terms of the
provisions of the Companies Act,2013. So far, the ICSI has issued Secretarial Standards
in terms of the “Meetings of the Board of Directors” (ss-1) and Secretarial Standards
on “General Meetings” (ss-2), these Secretarial Standards have come into force w.e.f.
1st of July,2015. Section 118 (10)of the companies act,2013 provide that every
company(other than a one-person company-OPC) shall observe Secretarial Standards
specified as such by the ICSI.
Disadvantages of corporate governance:
1. Separation of ownership and management

The officials and executives who oversee a company’s internal affairs and make
the bulk of its policies are not necessarily shareholders. For can, publicly traded
corporations, this may become a problem. In the absence of a controlling shareholder,
and the majority of shareholders vote by a proxy, the company’s assets shall be
managed by the board of directors and the officials. The ownership-management
distinction will lead to a conflict of interest between management’s obligation to
maximize shareholder value and increase its revenue.
2. Illegal Insiders’ Trading

The word “corporate insiders” applies to corporate executives, managers and
employees as they may have access to sensitive, non-public information about the
company that could impact their share value. Company insiders are not explicitly
forbidden from trading in corporate securities but must notify the Securities and
Exchange Board of India of these transactions. Illegal insider trading occurs when a
shareholder sells a stock without access to the information and in possession of

sensitive information relating to the potential value of his shares. An actioner not
directly associated with the company such as an external auditor, a government
regulator or a relative of a corporate insider may also participate in unlawful insider
trading. Since access to confidential corporate information is widely distributed, it can
be difficult to enforce legislation against insider trading.
3. Misleading Reports
There are many ways of presenting factually, accurate financial statements in a

way that misleads investors.
4. Regulation Costs
The misuse of corporate governance has led to the adoption of a broader

range of federal and state laws to discourage such abuses from repeating. Compliance
with this legislation can be burdensome and costly for companies.
CHAPTER- 3
COMPANY PROFILE
STATE BANK OF INDIA (SBI)
STATE BANK OF INDIA (SBI), state-owned commercial bank and financial services
company, nationalized by the Indian government in 1955. SBI maintains thousands of
branches throughout India and offices in dozens of countries throughout the world.
The bank’s headquarters are in Mumbai.
The oldest commercial bank in India, SBI originated in 1806 as the Bank of Calcutta.
Three years later the bank was issued a royal charter and renamed the Bank of Bengal. Along
with the Bank of Bombay (founded 1840) and the Bank of Madras (founded 1843), it was one
of three so-called presidency banks, each of which was jointly owned by the provincial
government and private subscribers. In 1921 the presidency banks were merged to form the
Imperial Bank of India (IBI), which then became the largest commercial enterprise in the
country. In 1955 the government of India and the country’s central bank, the Reserve Bank of
India (founded 1935), assumed joint ownership of IBI, which was renamed the State Bank of
India. Four years later, by the State Bank of India (Subsidiary Banks) Act, banks earlier
operated by individual princely states became subsidiaries of SBI. The Reserve Bank’s share of
SBI was transferred to the government in 2007. Since nationalization, SBI has served the
needs of Indian economic development through rural-development initiatives and
microcredit programs and by financing major agricultural and industrial projects and raising
loans for the government.
SBI is governed by a board of directors headed by a chairman. The chairman and

managing directors of the bank are appointed by the government.
The Bank’s Philosophy on Code of Governance
State Bank of India is committed to the best practices in the area of Corporate
Governance, in Letter and in spirit. The Bank believes that good Corporate Governance is
much more than Complying with legal and regulatory requirements. Good governance
facilitates effective Management and control of business, enables the Bank to maintain a high
level of business ethics And to optimize the value for all its stakeholders. The objectives can
be summarized as:
 To protect and enhance shareholder value.
 To protect the interest of all other stakeholders such as customers, employees and
society at large.
 To ensure transparency and integrity in communication and to make available full,
accurate and clear information to all concerned.
 To ensure accountability for performance and customer service and to achieve
excellence at all levels.
 To provide corporate leadership of highest standard for others to emulate.
The Bank is Committed To
 Ensuring that the Bank’s Board of Directors meets regularly, provides effective
leadership and insights in business and functional matters and monitors Bank’s
performance.
 Establishing a framework of strategic control and continuously reviewing its efficacy.
 Establishing clearly documented and transparent management processes for policy
development, implementation and review, decision-making, monitoring, control and
reporting.
 Providing free access to the Board to all relevant information, advices and resources
as are necessary to enable it to carry out its role effectively.
 Ensuring that the Chairman has the responsibility for all aspects of executive
management and is accountable to the Board for the ultimate performance of the
Bank and implementation of the policies laid down by the Board.
 The role of the Chairman and the Board of Directors are also guided by the SBI Act,
1955 with all relevant amendments.
 Ensuring that a senior executive is made responsible in respect of compliance issues
with all applicable statutes, regulations and other procedures, policies as laid down by
the GOI/RBI and other regulators and the Board, and reports deviations, if any.
ORGANISATIONAL STRUCTURE OF SBI :

The board of directors broadly governs the SBI presided by the chairman and
managing director. The government of India appoints both the chairman and managing
director. There are several bifurcations of the banking business. Each division is headed by
the managing director, who then reports to the chairman.
STRUCTURE :
 The board of directors broadly governs the SBI presided by the chairman and
managing director.
 The government of India appoints both the chairman and managing director.
 There are several bifurcations of the banking business.
 Each division is headed by the managing director, who then reports to the chairman.
 The global Human resource, chief financial officer, and the chief vigilant officer also
report to the chairman.
 To each managing director, the deputy managing directors of respective departments
are aligned within the managing director to facilitate streamlined banking business.
 The current chairman of SBI is Mr. Rajnish Kumar. Mr. P.K. Gupta, Mr. Dinesh Kumar
Khara, and My Arijit Basu are the current Managing Director of SBI.
 Normally, the Chairman and vice-chairman are stated in the Indian government’s SBI
board in consultation with the Reserve Bank of India.
 Two managing directors are chosen by the central board of SBI with approval from the
Indian government.
 The private shareholders elect six directors.
 One director each is nominated by the government of India and Reserve Bank of India.
 Eight directors are nominated and appointed by India’s government in consultations
and recommendations of the Reserve Bank of India.
PUNJAB NATIONAL BANK (PNB)

Punjab National Bank is a PSU working under union Government of India regulated
by Reserve Bank of India Act, 1934 and Banking Regulation Act, 1949. Punjab National Bank
was registered on 19 May 1894 under the Indian Companies Act, with its office in Anarkali
Bazaar, Lahore, in present-day Pakistan. The founding board was drawn from different parts
of India professing different faiths and of varying back-ground with, the common objective of
creating a truly national bank that would further the economic interest of the country. PNB's
founders included several leaders of the Swadeshi movement such as Dyal Singh Majithia and
Lala Harkishen Lal, Lala Lalchand, Kali Prosanna Roy, E. C. Jessawala, Prabhu Dayal, Bakshi
Jaishi Ram, and Lala Dholan Dass. Lala Lajpat Rai was actively associated with the
management of the Bank in its early years. The board first met on 23 May 1894. The bank
opened for business on 12 April 1895 in Lahore.
PNB is the first Indian bank to have been started solely with Indian capital that
survives to the present earlier Oudh Commercial Bank was established in 1881, but failed in
1958.
Mahatma Gandhi, Jawahar Lal Nehru, Lal Bahadur Shastri, Indira Gandhi and
the Jalianwala Bagh Committee have held PNB accounts.
PNB’s Corporate Governance philosophy stems from the belief that corporate
governance is an Integral element for improving efficiency and growth of the organization
with overall objective of enhancing investor and other stakeholders‟ confidence. As a Bank
PNB is committed to good corporate practices based on conscience, openness, fairness,
professionalism and accountability.
PNB’s Board of Directors, guided by the mission statement, and formulates strategies
and policies focusing on value optimization for all stakeholders like customers, shareholders
and the society at large.
Axis Bank (AB)

Axis Bank Limited is an Indian banking and financial services company headquartered
in Mumbai, Maharashtra. It sells financial services to large and mid-size companies, SMEs and
retail businesses.
As of 30 June 2016, 30.81% shares are owned by the promoters and the promoter
group (United India Insurance Company Limited, Oriental Insurance Company
Limited, National Insurance Company Limited, New India Assurance Company
Ltd, GIC, LIC and UTI). The remaining 69.19% shares are owned by mutual funds, FIIs, banks,
insurance companies, corporate bodies and individual investors
The bank was founded on 3 December 1993 as UTI Bank, opening its registered
office in Ahmedabad and a corporate office in Mumbai. The bank was promoted jointly by
the Administrator of the Unit Trust of India (UTI), Life Insurance Corporation of India (LIC),
General Insurance Corporation, National Insurance Company, The New India Assurance
Company, The Oriental Insurance Corporation and United India Insurance Company. The first
branch was inaugurated on 2 April 1994 in Ahmedabad by Manmohan Singh, then finance
minister of India.
In 2001 UTI Bank agreed to merge with Global Trust Bank, but the Reserve Bank of
India (RBI) withheld approval and the merger did not take place. In 2004, the RBI put Global
Trust under moratorium and supervised its merger with Oriental Bank of Commerce. The
following year, UTI bank was listed on the London Stock Exchange. In the year 2006, UTI Bank
opened its first overseas branch in Singapore. The same year it opened an office
in Shanghai, China. In 2007, it opened a branch in the Dubai International Financial
Centre and branches in Hong Kong.
On 30 July 2007, UTI Bank changed its name to Axis Bank.
In 2009, Shikha Sharma was appointed as the MD and CEO of Axis Bank.
In 2013, Axis Bank's subsidiary, Axis Bank UK commenced banking operations.
On 1 January 2019, Amitabh Chaudhry took over as MD and CEO.
In year 2021,the Bank had reduced its stake in Yes Bank from 2.39 per cent to 1.96 per cent
The Bank’s policy on Corporate Governance has been:

 To enhance the long-term interest of its shareholders, provide good management,
adopt prudent risk management techniques and comply with the required standards
of capital adequacy, thereby safeguarding the interest of its other stakeholders such
as depositors, creditors, customers, suppliers and employees.
 To institutionalize accountability, transparency and equality of treatment for all its
Stakeholders , as central tenets of good corporate governance and to articulate this
approach in its day-to-day functioning and in dealing with all its stakeholders.
ICICI Bank Ltd:

ICICI Bank Limited is an Indian financial services company with its registered office
in Vadodara, Gujarat, and corporate office in Mumbai, Maharashtra. It offers a wide range of
banking products and financial services for corporate and retail customers through a variety
of delivery channels and specialized subsidiaries in the areas of investment banking, life, non-
life insurance, venture capital and asset management. The bank has a network of 5,275
branches and 15,589 ATMs across India and has a presence in 17 countries.
The bank has subsidiaries in the United Kingdom and Canada; branches in United
States, Singapore, Bahrain, Hong Kong, Qatar, Oman, Dubai International Finance Centre,
China and South Africa; as well as representative offices in United Arab
Emirates, Bangladesh, Malaysia and Indonesia. The company's UK subsidiary has also
established branches in Belgium and Germany.
ICICI Bank was established by the Industrial Credit and Investment Corporation of
India (ICICI), an Indian financial institution, as a wholly owned subsidiary in 1994
in Vadodara however the parent company was formed in 1955 as a joint-venture of the World
Bank, India's public-sector banks and public-sector insurance companies to provide project
financing to Indian industry. The bank was founded as the Industrial Credit and Investment
Corporation of India Bank, before it changed its name to ICICI Bank. The parent company was
later merged with the bank.
ICICI Bank launched Internet Banking operations in 1998.
ICICI's shareholding in ICICI Bank was reduced to 46 percent, through a public offering
of shares in India in 1998, followed by an equity offering in the form of American depositary
receipts on the NYSE in 2000. ICICI Bank acquired the Bank of Madura Limited in an all-stock
deal in 2001 and sold additional stakes to institutional investors during 2001–02.
In the 1990s, ICICI transformed its business from a development financial institution
offering only project finance to a diversified financial services group, offering a wide variety of
products and services, both directly and through a number of subsidiaries and affiliates like
ICICI Bank. In 1999, ICICI become the first Indian company and the first bank or a financial
institution from non-Japan Asia to be listed on the NYSE.
ICICI, ICICI Bank, and ICICI subsidiaries ICICI Personal Financial Services Limited and
ICICI Capital Services Limited merged in a reverse merger in 2002.
In 2008, following the 2008 financial crisis, customers rushed to ICICI ATMs and
branches in some locations due to rumours of an adverse financial position of ICICI Bank. The
Reserve Bank of India issued a clarification on the financial strength of ICICI Bank to dispel the
rumours.
In March 2020, the board of ICICI Bank Ltd. approved an investment of Rs 1,000 crore in Yes
Bank Ltd. This investment resulted in ICICI Bank Limited holding in excess of a five percent
shareholding in Yes Bank.
ICICI Bank was established by the Industrial Credit and Investment Corporation of
India (ICICI), an Indian financial institution, as a wholly owned subsidiary in 1994. The parent
company was formed in 1955 as a joint-venture of the World Bank, India's public-sector banks
and public-sector insurance companies to provide project financing to Indian industry. It is an
Indian multinational banking and financial services company headquartered in Mumbai with
its registered office in vadodara.
ICICI Bank’s corporate governance philosophy encompasses regulatory and legal

requirements, which aims at a high level of business ethics, effective supervision and
enhancement of value for all stakeholders. The corporate governance framework adopted by
the Bank already encompasses significant portion of the recommendations contained in the
“Corporate Governance Voluntary Guidelines 2009‟ issued by the Ministry of Corporate
Affairs, Government of India.
CHAPTER 4
DATA ANALYSIS AND INTERPRETATION
Number of board of directors in case of selected Financial Institutions:
BOARD OF DIRECTORS
YEAR SBI PNB AXIS ICICI
2016-17 12 12 15 12
2017-18 12 11 15 13
2018-19 14 11 17 15
2019-20 14 7 15 12
2020-21 13 9 12 13
Chart no 4.1
SIZE OF THE BOARD

18
16
BOARD OF DIRECTORS
14
12 SBI
10 PNB
8 AXIS
6
ICICI
4
2
0
2016-17 2017-18 2018-19 2019-20 2020-21
YEAR
INTERPRETATION
Table No 4.1 indicates total board of directors conducted over the study period in
4 banks considered for the study. The figures relating to SBI exhibit increasing trend in
initial years. However, the number of board of directors conducted by PNB, AXIS & ICICI are
fluctuating trend over the period of 5 years.
4.2 Table showing the total board of directors meeting in case of all four
financial institutions:
BOARD OF MEETINGS
YEAR SBI PNB AXIS ICICI
2016-17 15 8 7 9
2017-18 13 10 9 13
2018-19 15 7 9 18
2019-20 16 12 10 8
2020-21 9 9 12 12
Chart no 4.2
BOARD OF MEETINGS
20
18
16
14
12 SBI
MEETINGS
10 PNB
8 AXIS
6 ICICI
4
2
0
2016-17 2017-18 2018-19 2019-20 2020-21
YEAR
INTERPRETATION:
Table number 4.2 shows that total Board meetings conducted in four bank
considered for the study. The figures relating to SBI, PNB & ICICI exhibit a fluctuating trend
over the period of five years. However the no. of board meetings conducted by AXIS Bank
are increasing over the study period.
4.3 TABLE SHOWING DISTRIBUTION OF THE BOARD OF DIRECTORS:
STATE BANK OF INDIA:

DISTRIBUTION OF BOARD OF DIRECTORS IN
SBI
EXECUTIV NON
YEAR E INDEPENDENT EXECUTIVE
2016-17 4 0 6
2017-18 4 0 8
2018-19 4 0 9
2019-20 4 1 8
2020-21 4 0 7
Chart no 4.3
STATE BANK OF INDIA

9
8
DISTRIBUTION OF BOARD
7
6
5 EXECUTIVE
INDEPENDENT
4
NON EXECUTIVE
3
2
1
0
2016-17 2017-18 2018-19 2019-20 2020-21
YEAR
Interpretation
Table No 4.3 indicates distribution board of directors of SBI conducted

over the study period considered for the study. The figures relating to Non
Executive Directors exhibit a fluctuating trend over the period of 5 years.
However, the Executive directors are constant over the study period.
PUNJAB NATIONAL BANK
DISTRIBUTION OF BOARD OF DIRECTORS IN

PNB
YEAR EXECUTIVE INDEPENDENT NON EXECUTIVE
2016-17 0 3 3
2017-18 4 3 4
2018-19 5 0 4
2019-20 3 0 4
2020-21 5 0 2
Chart no 4.4
DISTRIBUTION OF BOARD OF DIRECTORS IN AXIS

BANK
2016-17 2 8 5
2017-18 2 8 4
2018-19 2 8 6
2019-20 3 5 5
2020-21 3 6 3

5
4.5
4
3.5
3 EXECUTIVE
2.5 INDEPENDENT
2 NON EXECUTIVE
1.5
1
0.5
0
2016-17 2017-18 2018-19 2019-20 2020-21
YEAR
Interpretation
AXIS BANK
Chart no 4.5
AXIS BANK
8
7
6
5
EXECUTIVE
4 INDEPENDENT
3 NON EXECUTIVE
2
1
0
2016-17 2017-18 2018-19 2019-20 2020-21
YEAR

ICICI BANK
DISTRIBUTION OF BOARD OF DIRECTORS IN ICICI

2016-17 5 4 1
2017-18 2 3 8
2018-19 0 6 9
2019-20 4 6 1
2020-21 2 5 3
Chart no 4.5
ICICI BANK
9
8
7
6
EXECUTIVE
5
INDEPENDENT
4 NON EXECUTIVE
3
2
1
0
2016-17 2017-18 2018-19 2019-20 2020-21
YEAR
i) TABLE SHOWING DISTRIBUTION OF THE COMMITTEES OF THE BOARD
STATE BANK OF INDIA
COMMITTEES OF THE BOARD IN SBI

NOMINATION AND
REMUNERATION RISK MANAGEMENT
YEAR AUDIT COMMITTEE COMMITTEE COMMITTEE
2016-17 7 4 6
2017-18 7 3 6
2018-19 8 3 7
2019-20 8 4 7
2020-21 7 5 7
STATE BANK OF INDIA

8
7
COMMITTEES OF THE BOARD
6
AUDIT COMMITTEE
5 NOMINATION AND
4 REMUNERATION
COMMITTEE
3
RISK MANAGEMENT
2 COMMITTEE
1
0
2016- 2017- 2018- 2019- 2020-
17 18 19 20 21
YEAR
ii) TABLE SHOWING DISTRIBUTION OF THE COMMITTEES OF THE BOARD

COMMITTEES OF THE BOARD IN PNB
NOMINATION
AND RISK
REMUNERATION MANAGEMENT
2016-17 5 4 6
2017-18 5 6 4
2018-19 5 5 8
2019-20 4 2 7
2020-21 4 2 6

8
7
COMMITEES OF THE BOARD
6
5 AUDIT COMMITTEE
NOMINATION AND
4 REMUNERATION
3 COMMITTEE
2 RISK MANAGEMENT
COMMITTEE
1
0
2016- 2017- 2018- 2019- 2020-
17 18 19 20 21
YEAR
iii) TABLE SHOWING DISTRIBUTION OF THE COMMITTEES OF THE BOARD

AXIS BANK
COMMITTEES OF THE BOARD IN AXIS BANK

NOMINATION AND
2016-17 4 4 5
2017-18 4 4 5
2018-19 5 4 7
2019-20 5 4 7
2020-21 3 3 4
AXIS BANK
7
6
5 AUDIT COMMITTEE
NOMINATION AND
4 REMUNERATION
COMMITTEE
3
RISK MANAGEMENT
2 COMMITTEE
1
0
2016-17 2017-18 2018-19 2019-20 2020-21
YEAR
iv) TABLE SHOWING DISTRIBUTION OF THE COMMITTEES OF THE BOARD

ICICI BANK
COMMITTEES OF THE BOARD IN ICICI

NOMINATION AND
2016-17 3 3 6
2017-18 3 4 5
2018-19 4 8 7
2019-20 3 4 8
2020-21 3 4 3
ICICI BANK
8
7
6
5 AUDIT COMMITTEE
NOMINATION AND
4 REMUNERATION
3 COMMITTEE
2 RISK MANAGEMENT
COMMITTEE
1
0
2016- 2017- 2018- 2019- 2020-
17 18 19 20 21
YEAR

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CORPORATE GOVERNANCE IN FINANCIAL INSTITUTION

The project report on “A STUDY OF CORPORATE GOVERNANCE IN CASE OF FINANCIAL

Banks practicing good corporate governance in the traditional, shareholder-oriented

The great significance of corporate governance is highlighted by James D.

Corporate governance has a vital role in strategic management. Good governance

As the Task Force on Corporate Governance constituted by the Confederation of

The corporate governance of directors of banks and financial institutions was

Absence of a generally well accepted corporate governance framework consisting of a

The following are the main objective of the study

1. To know the study of good corporate governance in financial institutions

SCOPE OF THE STUDY:

NEED OF CORPORATE GOVERNANCE

Research methodology is a systematic way to solve a problem. It is a science of

LIMITATIONS OF THE STUDY:

 The study is only depend upon secondary data only

Effective corporate governance is recognized as an important tool for the risk

MEANING, DEFINITION AND FEATURES OF CORPORATE GOVERNANCE:

Corporate Governance refers to the way a corporation is governed. It is the technique

Corporate Governance is the interaction between various participants (shareholders,

Corporate Governance deals with determining ways to take effective strategic

Corporate Governance ensures transparency which ensures strong and balanced

The great significance of corporate governance is highlighted by a former President

FEATURES OF CORPORATE GOVERNANCE :

1. Strategy Setting and Planning:

4. Roles and Responsibilities:

5. Skills, Independence and Resources:

6. Conduct and Ethics:

9. Financial and Operational Reporting:

performance is accessible so as to assist in decision making. Reporting should also enable

10. Audit Committees:

1.2 OBJECTIVES OF CORPORATE GOVERNANCE

Good governance is integral to the very existence of a company. As it inspires and

WHY IS CORPORATE GOVERNANCE IMPORTANCE?

1. Ensuring integrity and ethical behavior in the company.

SCOPE OF CORPORATE GOVERNANCE:

Proper implementati on of corporate governance norms enhances the

1. The regulati ons facilitati ng transparency, accountability, fairness, and equity

3. regulatory authoriti es of the corporati on being professional, competent and

The primary objecti ve of implementi ng corporate governance is to

BUSINESS EXPANSION AND DEVELOPMENT

An eff ecti ve corporate governance strategy such as maintaining proper

Increased effi ciency, Lowered illegaliti es and mismanagement

1. Well-regulated internal management with an appropriate number of

4. Accountability of the board of directors and other executi ve promote a fair

NEED FOR CORPORATE GOVERNANCE

Corporate governance provides for preparing a code of conduct for an organization

BENEFITS OF CORPORATE GOVERNANCE:

CORPORATE GOVERNACE THEORY

Corporate Governance is a new way of conducting business affairs. Corporate

The organization for Economic co-operation and Development (OECD) in 1999

Corporate Governance is the structural basis of an organization through which the

STRUCTURE OF CORPORATE GOVERNANCE

Governance must incorporate information as follows:

1. Right of shareholders Corporate:

2. Equitable treatment of the shareholders:

 Working Group or the Companies act, 1996.

MECHANISM OF CORPORATE GOVERNANCE IN INDIA

Broadly speaking, the corporate governance mechanism for companies in India is

2. Listing Agreement as prescribed by SEBI:- SEBI introduced clause 49 to its listing

 Board of Directors:- The B.O.D. shall comprise of such a number of minimum

 Audit Committee: The audit committee to be set up shall comprise of a minimum of

3. Accounting Standard issued by the Institute of Chartered Accountant of India (ICAI):