STRUCTURE AND MECHANISM OF CORPORATE GOVERNANCE IN THE INDIAN BANKING SECTOR

The banking sector serves as the main source of resource mobilization in developing economies. Due to underdeveloped money markets and capital markets, limited availability of financial instruments and a lack of confidence in the financial system, banks become the dominant financial intermediary in the system. Given the banks intermediary role in providing stability to the financial system, many emerging economies have implemented policies to develop and restructure the banking sector. Good corporate governance is designed to address this problem. Further, government regulations and frequent interventions reduce the incentive for effective monitoring and, at the same time, make supervision (or supervisors) less effective. The present paper an attempt is made to discuss about the Structure and Mechanism of Corporate Governance in the Indian Banking Sector.