A PROJECT REPORT ON

CORPORATE GOVERNANCE IN BANKING SECTOR

SUBMITTED
TO THE UNIVERSITY OF MUMBAI
AS A PARTIAL REQUIREMENT FOR
COMPLETING THE DEGREE OF
M.COM (BANKING AND FINANCE) SEMESTER IV
SUBJECT: FINANCIAL MARKETS
SUBMITTED BY:
DILSHAAD SHAIKH
ROLL NO: 37

UNDER THE GUIDANCE OF

MR.CHETAN KUKREJA

SIES COLLEGE OF COMMERCE AND ECONOMICS,

PLOT NO. 71/72, SION MATUNGA ESTATE
T.V. CHIDAMBARAM MARG,
SION (EAST), MUMBAI 400022.

CERTIFICATE
This is to certify that Miss DILSHAAD .SHAIKHof M.Com
(Banking and Finance) Semester IV (academic year 2015-2016) has
successfully completed the project on CORPORATE GOVERNANCE

IN BANKING SECTOR under the Guidance of Prof.Chetan Kukreja

________________

___________________

(Project Guide)

(Course Co-ordinator)

Prof.Chetan Kukreja

___________________
(External Examiner)

Ms.

___________________
(Principal)
Dr.Kinnary Thakkar

Place:MUMBAI
Date: 1/2/2016

DECLARATION

I,DILSHAAD_S.SHAIKH________________________________________S
tudent M.Com (Banking and Finance) Semester IV (academic year
2015-2016) hereby declare that, I have completed the project on

CORPORATE GOVERNANCE IN BANKING SECTOR

The information presented in this project is true and
original to the best of my knowledge.

___________________
Name:DILSHAAD
SHAIKH
Roll No.: 37
Place: MUMBAI
Date: 1/2/2016

ACKNOWLEDGEMENT
I would like to thank the University of Mumbai, for introducing M.Com
(Banking and Finance) course, thereby giving its students a platform to be
abreast with changing business scenario, with the help of theory as a base and
practical as a solution.
I am indebted to the reviewer of the project ,Prof.Chetan Kukreja my
project guide who for his support and guidance. I would sincerely like to thank
his for all his efforts.
Last but not the least; I would like to thank my parents for giving the best
education and for their support and contribution without which this project
would not have been possible.

______________________

Name :DILSHAAD SHAIKH

Roll no:37

OBJECTIVE OF THE STUDY

To study the definition and meaning of corporate governance in banking sector
To study the evolution and relation of corporate governance in banking sector
To study the objective ,needs , importance & role of corporate governance in banking sector
To study the impact of corporate governance norms & policies in banking sector
To study the measures taken by regulators towards corporate governance in banking sector
To study the problems and key areas of failure of corporate governance in banking sector

RESEARCH METHODOLOGY
The data collected to complete this project is from secondary sources
SECONDARY SOURCE
The data is gathered from newspaper, internet, articles, newspaper, books & journals etc

INDEX
SR.NO

TOPICS

PAGE.NO

INTRODUCTION

1-7

1.1

INTRODUCTION

1.2

DEFINITION AND MEANING OF CORPORATE

1.3

GOVERNANCE
EVOLUTION OF CORPORATE GOVERNANCE IN
BANKING SECTOR

1.4

RELATION OF CORPORATE GOVERNANCE IN

BANKING SECTOR

OBJECTIVE,NEED,IMPORTANCE & ROLE OF

8-16

CORPORATE GOVERNANCE IN BANKING SECTOR

3

MEASURES TAKEN BY REGULATORS TOWARDS

CORPORATE GOVERNANCE IN BANKING SECTOR
3.1

SEBI GUIDELINES ON CORPORATE

GOVERNANCE IN BANKS

3.2

RESAON OF HIGH DEGREE OVERSIGHT

3.3

MEASURES TAKEN BY BANKS TOWARDS

IMPLEMENTATION OF BEST PRACTICES

3.4

CODE OF BEST PRACTICES OF BANKS RBI

GUIDELINES

17-26

IMPACT OF CORPORATE GOVERNANCE NORMS &

27-30

POLICIES IN BANKING SECTOR

5

CORPORATE GOVERNANCE IN BANKING SECTOR

31-32

AS PER INDIAN SCENARIO

6

PROBLEMS AND KEY AREAS OF FAILURES OF

33-37

CORPORATE GOVERNANCE IN BANKS

38

CONCLUSION

39

BIBLIOGRAPHY

EXECUTIVE SUMMARY
Corporate governance is an age old concept which provides for a set of transparent
relationships between an institutions management, its board, shareholders and other
stakeholders. Corporate governance is gaining centre stage in the recent times due to failure
of corporate and wide dissatisfaction among the people with the way corporate works and
hence became a widely discussed topic worldwide. Corporate Governance is now recognised
as a paradigm for improving competitiveness and enhancing efficiency and thus improving
investors confidence and accessing capital. Now corporate governance has become a more
dynamic concept and a not a mere static one.
Bank and Financial Institutions are the backbone of the economic sector of any country. The
healthy economic condition of a nation is depicted through the sound functioning of its
banks. Banks form a crucial link of a countrys economic sector hence they are universally
regulated industry and their well being is imperative for the economy. Working of banks is
different from other corporate in many important respects, and that makes corporate
governance of bank not only different but also critical. Hence corporate governance is
conceptually different for banks. If a corporate fails, the fall outs can be restricted to the
stakeholders, but if a bank fails, the impact can spread rapidly through other banks with
potentially serious consequences for the entire financial system and the macro economy. Thus

though various guidelines are provided for working of a bank, corporate governance cannot
be overlooked or discarded. Regulations, guidelines and corporate governance are
complementary to each other in banking industry.
The present paper is divided into different sections. In the first part it discusses about
corporate governance, its history in India as well as world. Second part talks about
applicability of corporate governance as an internal mechanism in banking sector. In third
part it talks about the applicability of corporate governance in the banking sector and the
mechanism to be adopted for its dynamic usage and in the last part about the various recent
developments of corporate governance in banking sector