The debate on corporate governance is in full swing and literature on thissubject is mushrooming. The more we try to define or understand it, the less clear its meaning becomes. Put simply, corporate governance is a set of standards, which aims to improve a company's image, efficiency, effectiveness and social responsibilities. According to the Kumar Manglalam Birla Committee, "The fundamental objective of corporate governance is the enhancement of shareholder value, keeping in view the interest of other stakeholders." In fact, corporate governance is an endeavor to become a model corporate citizen. Aristotle said: "It is not the same thing to be a good man and a good citizen." One may be a good man because one is nice to one's near and dear ones. But unless one is nice to the large body of the unseen people (i.e., society), one is not a good citizen. Thus, in essence, corporate governance translates into conducting the affairs of a company in a manner that ensures fairness to customers, employees, shareholders, fund providers, suppliers, the regulators and the society as a whole. The principles of corporate governance are like lighthouses. There are natural laws that cannot be broken. As Cecil B DeMille observed of the principles contained in his monumental movie, The Ten Commandments, "It is impossible for us to break the law. We can only break ourselves against the law."
Banks play an important role in the life of the common man in India. The common man has abundant faith in banks, particularly the public sector banks. It is said that people don't change their doctors and chartered accountants. The same is true for banks as well. We can find a large number of customers who have maintained their savings, current or deposit accounts in the same bank since decades. Therefore, it is imperative that banks follow the virtues of good corporate governance like transparency, fairness, probity and accountability not only in letter but also in spirit. However, the current overall policy framework in this area has remained antediluvian and this has prevented banks from implementing the concept of governance in a true sense. Governance in public sector banks is widely celebrated but least practiced.
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