Corporate Governance in Banks
Banks ,in a broad sense, are institutions whose business is handling other people’s money.
A joint stock bank, also known as commercial bank, is a company whose business is banking. These are more particularly institutions that deal directly with the general public, as opposed to the merchant banks and other institutions more concerned with trade and industry.
Further, there are also investment banks which acquire shares in limited companies on their own account, and not merely as agents for their customers.
Sometimes, banks are set up to handle specialized functions for particular industries such as the Industrial Development Bank of India (IDBI), National Bank for Agricultural and Rural Development (NABARD) and Export-Import Bank (EXIM Bank).
Banks are thus a critical component of any economy. They provide financing for commercial enterprises, basic financial services to a broad segment of the population and access to payment systems. In addition, some banks are expected to make credit and liquidity available in difficult market conditions.
The importance of banks to national economies is underscored by the fact that banking is virtually universally a regulated industry and that banks have access to government safety nets. It is of crucial importance, therefore, that banks have strong corporate governance.
There has been a great deal of attention given recently to the issue of corporate governance in various national and international forums.
In particular, the OECD has issued a set of corporate governance standards and guidelines to help governments in their efforts to evaluate and improve the legal, institutional and regulatory framework for corporate governance in their countries, and to provide guidance and suggestions for stock exchanges, investors, corporations, and other parties that have a role in the process of developing good corporate governance.
Banks ,in a broad sense, are institutions whose business is handling other people’s money.
A joint stock bank, also known as commercial bank, is a company whose business is banking. These are more particularly institutions that deal directly with the general public, as opposed to the merchant banks and other institutions more concerned with trade and industry.
Further, there are also investment banks which acquire shares in limited companies on their own account, and not merely as agents for their customers.
Sometimes, banks are set up to handle specialized functions for particular industries such as the Industrial Development Bank of India (IDBI), National Bank for Agricultural and Rural Development (NABARD) and Export-Import Bank (EXIM Bank).
Banks are thus a critical component of any economy. They provide financing for commercial enterprises, basic financial services to a broad segment of the population and access to payment systems. In addition, some banks are expected to make credit and liquidity available in difficult market conditions.
The importance of banks to national economies is underscored by the fact that banking is virtually universally a regulated industry and that banks have access to government safety nets. It is of crucial importance, therefore, that banks have strong corporate governance.
There has been a great deal of attention given recently to the issue of corporate governance in various national and international forums.
In particular, the OECD has issued a set of corporate governance standards and guidelines to help governments in their efforts to evaluate and improve the legal, institutional and regulatory framework for corporate governance in their countries, and to provide guidance and suggestions for stock exchanges, investors, corporations, and other parties that have a role in the process of developing good corporate governance.