1.Study on Corporate Governance in Indian Banking Sector.doc

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CORPORATE
GOVERNANCE IN INDIAN
BANKING SECTOR
By
Pushkar GUPTA
2007 – 2008
A Dissertation presented in part consideration for the degree of
MA in Finance and Investment

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ACKNOWLEDGEMENTS
My sincere appreciation is extended to many people who helped and supported me through
this dissertation.
First and Foremost, I would like to thank Professor David Owen for his invaluable advice and
comments. Without his support this study would not have been possible.
I would also like to thank the interview participants for their sincere feedback and
suggestions.
Last but not the least; I would like to thank my parents for always being there for me. They
have constantly guided and encouraged me through this study.

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ABSTRACT
Corporate Governance has fast emerged as a benchmark for judging corporate excellence in
the context of national and international business practices. From guidelines and desirable
code of conduct some decade ago, corporate governance is now recognized as a paradigm for
improving competitiveness and enhancing efficiency and thus improving investors’
confidence and accessing capital, both domestic as well as foreign. What is important is that
corporate governance has become a dynamic concept and not static one.
Banks form a crucial link in a country’s financial system and their well-being is imperative
for the economy. The significant transformation of the banking industry in India is clearly
evident from the changes that have occurred in the financial markets, institutions and
products. While deregulation has opened up new vistas for banks to augment revenues, it has
entailed greater competition and consequently greater risks. Cross-border flows and the entry
of new products have significantly influenced the domestic banking sector, forcing banks to
adjust the product mix, as also to effect rapid changes in their processes and operations in
order to remain competitive in the globalized environment. These developments have
facilitated greater choices for consumers who have become more discerning and demanding
compelling banks to offer a broader range of products through diverse distribution channels.
In such scenario, implementation of good corporate governance practices in banks can ensure
them to cope with the changing environment. Today’s corporate governance means to do
everything better and provides for risk assessment, risk cover, early warning systems against
failure as well as prompt corrective action.
This research examines the practices of corporate governance attributes in banking sector and
how they adhere to corporate governance practices. The results of this research indicate the
practice of corporate governance is at nascent stage although corporate governance practices
by Indian Banking Sector is more than a decade. Both private and public sector banks are
adhering to mandatory requirements of corporate governance attributes as a result it is
bringing more transparency and minimizing the chances of fraud and malpractices. However,
hope is looming large for the proper implementation of corporate governance principles in
Indian Banking Sector.

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TABLE OF CONTENTS
Chapters Page
1. INTRODUCTION
Introduction…................................................................................................... 1
Background of the Research….........................................................................5
Need of Corporate Governance ........................................................................8
Research Objectives.......................................................................................... 9
Research Questions........................................................................................... 9
Scope of the Research…................................................................................. 10
1.5 Organization of the Research…...................................................................... 10
2. LITERATURE REVIEW
Introduction…................................................................................................. 11
Corporate Governance: Definitions................................................................11
History of Corporate Governance in India ......................................................12
Governance in Banks......................................................................................17
Role of Governance in Banks .........................................................................21
Areas of Concern: Ownership…....................................................................... 22
Composition of Board…................................................................................. 23
Governance through Committees ...................................................................24
Critical Analysis of Literature .........................................................................25
3. METHODOLOGY
Introduction…................................................................................................. 27
Research Approach….....................................................................................27
The Research Method… .................................................................................28
Research Design… ..........................................................................................30
Reliability and Validity of the Research…..................................................... 31
Limitations of the Research… ........................................................................31

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4. ANALYSIS AND INTERPRETATION
Introduction…................................................................................................. 32
Analysis from secondary Research…............................................................. 32
Analysis of Primary Research…..................................................................... 51
5. CONCLUSION ...........................................................................................................66
6. REFERENCE LIST.................................................................................................... 70
7. APPENDIX

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Introduction
CHAPTER-1
The subject of corporate governance has attracted worldwide attention with a series of
collapse of high profile companies like Enron, WorldCom, HIH insurance group etc. These
failures have shattered the trust of investors worldwide. Some of the scandals which made
headlines all around the world were somewhere related to poor corporate governance. These
include the $18 billion meltdown of Parmalat Finanziaria, SpA in 2003. Parmalat was among
the largest food-based companies in the world .The Parmalat case was one of the biggest
scandals to hit Europe and many analysts called this fraud as 'Europe's Enron'. The
company’s corporate governance structure could not keep up to some of the key existing
Italian corporate governance standards of best practice (Melis, 2004). Another classic
example of a corporate house collapsing due to poor decision making and weak corporate
governance was the HIH insurance group of Australia. This collapse resulted in a deficiency
up to $5.3 billion, “making it the largest corporate failure” in Australia (Lipton, 2003). The
collapse of the China Aviation Oil (CAO) also created certain doubts regarding the standard
of corporate governance in China. This collapse came at a time when many companies were
trying to get internationally listed and foreign investors were becoming more and more eager
to buy them out (Economist Intelligence Unit, 2004).
Poor corporate governance in banks is not a new subject. This inefficiency has been around
for a very long time. Since the beginning of Banking in Nigeria in 1914, almost “75 banks
were lost primarily because of factors related to poor corporate governance”. The banks did
not fail due to lack of customers but due to how they were managed and governed. According
to a study by the Nigerian Deposit Insurance Corporation, the main reason for these failures
was interference of board members (www.allafrica.com). Moreover, the recent subprime
crises highlighted many issues of corporate governance in banks world over. The main issue
was that of independent directors. For e.g., UBS, one of the world’s largest banks was among
the biggest losers in the subprime crisis. It suffered a loss of about $38 billion. As a result it
replaced four of its directors. The departing members included “three outsiders with

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experience respectively in rail equipment, chemicals and information technology”. This
shows that banks should definitely use experts on their boards (Economic Times, 2008).
According to Zabihollah Rezaee (2005), there may be seven reasons behind these high profile
failings. These include lax regulations, overconfident and egoistic management, inappropriate
business conduct by top level management, deficiency of alert oversight functions,
unproductive audit functions, poor financial disclosures and negligent shareholders. The
above frauds adversely affect corporate governance, auditors’ creditability and the quality of
financial statements.
A good thing that came out of these corporate scandals was the global acceptance of the need
for necessary checks and balances. Worldwide, it has now become necessary for big
corporate houses to address the issue of corporate governance as investor demands fluctuate.
Responsibility, transparency, fairness and accountability are the four vital pillars for strong
corporate governance. Large and trusted companies across the globe realized the significance
of corporate governance and subsequently took drastic steps to ensure practice of corporate
governance. These days corporate governance is a reality which can’t be overlooked by any
financial institution who wants to be successful. There are a number of factors which force a
company to adhere to a set of corporate governance principles. These may include stern
regulators, vigilant and smart investing community, alert customers and the awareness among
companies to be good corporate citizens. Companies should ensure a constant flow of profits
but without crossing moral and ethical boundaries.
However, some bad experiences in the past have exposed the fact that big corporate houses
which have committed frauds have tacit support from banks. Questions have arisen thick and
fast as to how people entrusted with governance of these corporate/banks, had failed to detect
and stem the rot, before it was too late. Banks are constituted as companies under the
companies act and they should be concerned with good governance Corporate governance
has always been closely monitored by Asian regulators and this term has been a top priority
for them in recent times. This is happening because of the fact that most of the markets have
introduced a wide range of regulations. This particular research “Corporate Governance in
Indian Banking Sector” will try to unfold the cause and effect of governance principles on
banks. This research also studies the effectiveness of its so-called objectives to control the
misgovernance in Indian Corporate sector. Next, this research analyses the upcoming

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evidence on which government policies improve the governance of banks and describes
tentative guidelines for future modification of its principles.
Corporate Governance is aimed at ensuring proper governance of business as well as
complying with all the governance norms prescribed by regulatory board for the benefit of all
interested parties including society. The basic objective is the maximization of long-term
shareholders value within the parameter of public law and social ethics to give an impression
to customers and employees about the transparency and fairness of business. Particularly in
banking sector, good corporate governance is very much essential for justifying its role in
money management. Best practices of corporate governance in banks are of great value to a
number of stakeholders’ viz., depositors, creditors, customers, shareholders, employees and
society at large. Corporate governance is about the nitty-gritty of how a corporation executes
its commitment to investors and other stakeholders. It is about loyalty to investors, valuing
principled business behavior and functioning with a high degree of transparency.
The corporate governance is therefore a systematic approach where the connective members,
management and employees are expected to cooperate in the decision making process of the
company. Based on some fundamental reasons, the corporate governance holds its premise
that the business should be conducted by the desires of shareholders. It identifies the
distribution of rights and responsibilities among a variety of stakeholders in the company. It
also briefly outlines the structure and process for judgment on matters related to the company
dealings. In the context of the above, the following are the broad objectives on which
corporate governance can be measured: i) Suggested model code of best practices, ii)
Preferred internal systems, iii) Recommended disclosure requirements, iv) Board members’
role, v) Independent director, vi) Key information to the board/committee, vii) Committees of
board, viii) Policies to be established by the board and ix) Monitoring performance. (Buxi,
2005)
Effective corporate governance is important for any company to be successful irrespective of
the type of business it does. But for banks and financial institutions corporate governance
assumes a greater level of importance. There may be a couple of reasons for this; firstly,
banks form a very vital connection in the financial system which helps to mobilize and allot
funds between borrowers and depositors. Efficient banks help create healthy economies as
they are the back bone of any financial system. “If the saga of various financial crises across

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the world is any indication, the banks have been the precipitators of crises”. Secondly, banks
are morally responsible for the funds which they move within an economy as they are the
keepers of the money of their depositors. This forces the government to help them out when
they are in trouble. In contrast to companies in other sectors, corporate governance in the
Indian Banking sector has very different implications. The banking sector in India is subject
to stricter guidelines and parameters. Further, it also makes banking a highly regulated
industry, when the “State keeps close to its heart”. (ICFAI Journal, 2001)
As per Basel committee Report 1999, Banks have to display the exemplary of corporate
governance practices in their financial performance, transparency in the balance sheets and
compliance with other norms laid down by section 49 of corporate governance rules. Most
importantly, their annual report should disclose accounting ratios, relating to operating profit,
return on assets, business per employee, NPAs, maturity profile of loans, advances,
investments, borrowings and deposits. Similarly the audit reports of bank should highlight
those disclosures which are in line with corporate governance rules. Hence, auditors should
have the complete know how about all the features of the latest guidelines given by Reserve
Bank of India (RBI) and ensure that the financial statements are made in a fraud free manner
and should mirror the implementation of corporate governance. Apart from auditor’s
seriousness to bring those requirements appropriately in audit report, there should be
adequate internal control systems in the operational activities of banks. It is very much
essential for banks to devote adequate attention on internal control system so as to maximize
their returns on each unit of capital inducted through an effective funds management strategy
and mechanism. (Basel Committee Report, 1999)
Corporate governance has, of course, been an important subject of discussion since many
years. Scholars and researchers from finance fields have actively investigated the importance
and efficacy of corporate governance for at least a quarter of century (Jenson and Meckling,
1976). There have been intense brainstorming and debates over the practices of corporate
governance practices particularly in the developed nations. However, the effectiveness of
corporate governance practices in the developed nations tells an ironical story from the CG
(corporate governance) practices point of view. The volume of scandals and lack of
transparency in governance in the developed nations nullifies its true commitment to
governance practices compared to the developing world (Shleifer et al., 1997). Therefore,

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much prior to the recent wave of corporate frauds in developed economies, corporate
governance has been a fundamental subject in emerging economies.
Background of the Research
The subjective evidence of the 1997 Asian crisis showed that poor corporate governance
contributed to the collapse of many banks and corporate firms in Thailand, Malaysia, South
Korea and Indonesia. Since then, there has been a sincere effort to improve corporate
governance in the crisis ridden countries (Gan et al, 2001). The financial crisis in some Asian
countries in late 1990s prompted most of the countries to give improved corporate
governance a priority. “The losses due to weak corporate governance practices and corruption
are estimated at nearly 15 percent of China’s GDP, though the figure may be much higher”
(www.csis.org). An annual collaborative study of the corporate governance landscape of
Asian markets titled "Spreading the World: CG Watch 2004-05" was undertaken by
independent stockbrokers. From this forum the awareness and importance of corporate
governance in Asian countries was realized. Asian countries do realize that CG practices
would not change overnight; hence patience is the key to success in this field (Bhasin, 2006).
Considering the importance of this subject, Asian Corporate Governance Association
(ACGA), made a report during 2004-05, on the state of affairs of corporate governance in
Asian markets, emphasizing on some key determinants behind assessing corporate
governance standards such as rules and regulations, enforcement, political and regulatory
environment, the adoption of international accounting standards, and corporate governance
culture.

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Table : Asian Governance Regimes
CLSA/ACGA Country" Ranking Criteria
China
Hong
Kong
India
Indonesia
Korea
Malaysia
Philippines
Singapore
Taiwan
Thailand
Rules and Regulations
Most companies reports their annual results
within 2 months?
N N N Y N Y N Y N Y
Have reporting deadlines been shortened in
the past 3 years?
N N Y Y N Y N Y N S
Is quarterly reporting mandatory? S N Y Y Y Y Y Y S Y
Do securities laws requires disclosure of
ownership stakes above 5%
Y Y Y S Y Y N Y N Y
Do securities laws require prompt disclosure
of share transactions by directors and
controlling shareholders?
Y Y Y N Y Y Y Y S Y
Are class-action lawsuits permitted? S N N N Y N N N S N
Is voting by poll mandatory for resolutions at
AGMs?
N S N N N N N N S N
Can shareholders easily remove a director
who has been convicted of fraud or other
serious corporate crimes?
S S N S N S S Y Y N
Will share option expensing become
mandatory over the next 10 month?
N Y S S N N Y Y S N
Enforcement
Is there an independent commission against
corruption (or its equivalent) that is seen to be
effective in taking public and private sector
companies?
N Y S N S S N Y N N
Political and Regulatory Environment

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Is the statutory regulatory (i.e., securities
commission autonomous of government (not
part of the Finance Ministry)?
S Y S N S S S S S S
Accounting and Auditing
Do the rules require disclosure of
consolidated accounts?
Y Y Y Y Y Y Y Y S Y
Do the rules require segment reporting? Y Y Y S Y Y Y Y S Y
Do the rules require disclosure of audit and
non-audit fees paid to the external auditor?
Y Y Y N Y Y S S Y Y
Does the government or the accounting
regulator have a policy of following
international standards on auditing?
Y Y S S S Y Y Y S Y
Institutional Mechanism and Corporate
Culture
Are institutional investors engaged in
promoting better corporate governance
practices?
N S S N S S N S S S
Are any retail investors engaged in promoting
better corporate governance practices?
N Y S N Y S N Y N N
Have retail investors formed their own
shareholder activist organization?
N N Y S Y S N Y N N
*Japan was not covered in this survey. Keys Y= Yes, N= No. S= Somewhat
Source: CLSA Asia-Pacific Markets: Asian Corporate Governance Association
(www.acgs.asia.org)
Corporate governance has been on the top priority of Asian countries with most markets
introducing comprehensive regulations. Although it cannot be called a fully satisfied
accomplishment from the evidence of its achievements, but the ethos of corporate governance
is yet to come out fully. During the same period, the need for corporate governance was also
felt in line with the international trend. The first initiative for ensuring corporate governance
among Indian companies came from the corporate sector itself. The Confederation of Indian
Industry (CII) came up with the Code of Desirable Corporate Governance in 1998. Then the
Securities Exchange Commission of India (SEBI) which is the regulator of Indian financial
market, appointed 'Kumaramangalam Birla Corporate Governance Committee'. Most of the

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recommendations made by the Committee were accepted and implemented by SEBI in the
year 2000.
Need of Corporate Governance in Banking
As we are marching forward towards global economy, there are many economic issues
coming up in the process for developing, emerging and transitional economies. These can be
correctly identified as structural changes in market institutions. It brought about much
awareness among investors, bankers and public at large. Such economy faced a retarded
growth in spite of having economic reform like privatization, liberalization and lifting
licensing raj. Despite flow of money in such economy, the growth could not take its stand due
to unbalanced approach. The holder of ‘para-state’ institutions such as privatization funds
remain in the hands of largest shareholders of companies. As a result, the de facto power
remains loaded in the hands of few individuals considered as internal owners, while the
external owners do not have enough power to control the companies and thereby can’t ensure
themselves to get appropriate returns (Fernando, 2002).
Another important factor in banking industry in developing countries is that banks are mostly
owned by government. In such situation, banks are mostly guided by government bodies and
many laws based on stereotype procedures. The accountability idea is less apparent as the
concept of government job discourages the spirit of competition. The need for corporate
governance in developing, emerging and transitional economies not only arises from
resolving problems of ownership and control, but also from ensuring transparency in
achieving the desired goal of corporate governance. In many cases, developing and emerging
economies are beset with issues such as the lack of property rights, the abuse of minority
shareholders, contract violations, asset stripping and self-dealing.
Ownership pattern, regulatory environment, societal pressure (on the developmental role of
banks) and the broad structure would be the key elements in the design of a governance
framework of banking. While government ownership does provide core strength to banks, the
structural inefficiencies and lack of management autonomy appears to have weakened the
ability of our banks (Public sector) to compete effectively in the current market situation
(Ravisankar, 1999).

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Banks and financial institutions have been making pivotal contributions over the years to
nation’s economic growth and development. Government-owned (Public Sector) banks have
played a major role in economic development. During the last few years, these institutions are
slowly getting “corporatized” and consequently corporate governance issues in banks
assumes greater significance in the coming years. Considering the importance of banking
sector the practice of corporate governance and how it helps banking industry in India in
terms of bringing more transparency and overall growth of banking sector. So the research
will identify the attributes of corporate governance and to what extent it is being implemented
in India’s banking sector.
Research Objectives
The research aims at studying the attributes of corporate governance in Indian banking sector.
The research maintains following objectives to study in this research:
▪ How the implementations of corporate governance attributes bring changes in banking
sector in terms of transparency and economic growth?
▪ Does the compliance with corporate governance attributes by banks ensure protection of
stakeholders’ (particularly, the shareholders') rights and interests?
▪ Can corporate governance be mandatory in banking sector so that curbing malpractices and
fraud can be minimized?
Research Questions
The proposed research will ask some fundamental questions on corporate governance in
banking sector and will try to identify how it helps banks to ensure transparency and growth.
The questions are:
▪ How the attributes of corporate governance help banking sector to create a situation, which
can minimize fraud/malpractices in financial matter in banking sector?
▪ Whether ownership pattern influences the effective governance and functioning of a bank?
▪ Does the declaration of corporate governance in annual report bring more transparency in
their business and how it pays in terms of business? Can it be mandatory in all sector of
banking?
▪ Does the proper implementation of corporate governance principles create more public trust
and acceptability of a bank as a result give boost to share price?

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▪ Is there any difference in corporate governance practices between Private sector and Public
sector banks?
▪ To what extent Indian Banking sector has accepted/implemented corporate governance
principles compared to international norms?
▪ What are suggestions to banking industry in regards attributes of corporate governance?
Scope of the Research
This study attempts to find the implementations of some attributes of corporate governance
by Indian Banking sector. Though there are a lot of corporate governance codes
recommended by different committee, this study is based on some prominent governance
codes in recommendations made so far. Transparency in decision making, accountability and
responsibility, disclosure of important information, share price movements, and mandatory
requirements under section 49 etc, are taken as indicator of good corporate governance. The
study will concentrate on public and private sector banks. The scope of the research is not
very wide. Hence it fails to shows the absolute impact of corporate governance attributes on
the performance of banks.
Organization of the Research
The organization of the present research follows conventional chapter plan. Chapter one
highlights introduction of corporate governance, conceptual discussion, objectives of the
research and scope of the research. Chapter two narrates the academic literature on corporate
governance and especially corporate governances in banking sector. Chapter three describes
the research problems, methodology of the research and limitation of the research. Chapter
four presents the outcome of primary and secondary research analysis. Chapter five gives
concluding remarks on the research analysis and recommendation to improve corporate
governance practices in Indian Banking sector.
CHAPTER-2
Literature Review
Introduction
The term “Corporate Governance” which was rarely encountered before the 1990s has now
become an all-pervasive term in the recent decade. In today’s scenario this term has become
one of the most crucial and important concepts in the management of companies. The root of

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corporate governance dates back to Adam Smith but its popularity is of recent origin. The
concept of corporate governance can be understood as “the system through which
shareholders are assured that their interest will be taken care of by management”. In a much
wider term, corporate governance was defined as “the methods by which suppliers of finance
control managers in order to ensure that their capital cannot be expropriated and that they
earn a return on their investment” (Parekh, 2003).
The literature on corporate governance in its wide subtext covers a variety of aspects, such as
protection of shareholder’s rights, improving shareholders’ value, board matters etc.
However, the importance of corporate governance in banking sector weighs very much due to
very nature of banking transactions. Banking is the crucial factor effecting economic
development of an economy. It is the life-blood of a country. It is responsible for the flow of
credit and for maintaining the financial balances of the economy. In India, since the
nationalization process banks emerged as a tool of economic development along with social
justice. Corporate Governance has become very important for banks to perform and remain in
competition in this era of liberalization and globalization.
Corporate Governance: In Search of a Definition
The term ‘governance’ has been derived from the word ‘gubernare’, which means “to rule or
steer”. Originally this term meant to be a normative framework for exercise of power and
acceptance of accountability used in the running of kingdoms, regions and towns. However,
over the years it has found significant relevance in the corporate world. This is basically due
to growing number and size of the corporations, the widening base of the shareholders,
increasing linkages with the physical environment, and overall impact on the society’s well-
being as we need a proper administrative system to regulate so many complex things.
The analysis of World Bank definition on corporate governance seems more appropriate as it
analyzes from two different perspectives. From the company’s point of view, the stress is put
on the relations between the various stakeholders such as owners, management, employees,
customers, suppliers, investors and communities. From another perspective in defining
corporate governance is reliable path where the corporate governance structures can be
established. So, a “nation’s system of corporate governance can be seen as an institutional
matrix that structures the relations among owners, boards, and top managers, and determines
the goals pursued by the corporation”. (World Bank, 2002)

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The OECD’S (1999) original definition is: “Corporate governance specifies the distribution
of rights and responsibilities among different participants in the corporation, such as the
board, managers, shareholders and other stakeholders, and spells out the rules and procedures
for making decisions on corporate affairs. By doing this, it also provides the structure through
which the company objectives are set, and the means of attaining those objectives and
monitoring performance.”
According to the Economist and Noble Laureate Milton Friedman, “Corporate Governance is
to conduct the business in accordance with owners or shareholders’ desires, while
conforming to the basic rules of the society embodied in law and local customs”(Economic
Times, 2001). In nutshell, it can be said that corporate governance means doing everything
better to improve relationships between companies and their shareholders, to improve quality
of outside directors, to encourage people to think long-term and to ensure that information
needs of all stakeholders are met. The discussion on governance has been dated back more
than decade in different economies. Traveling through the pre-1992 American discussions on
disassociation of power and money (emanating from the Watergate Scandal), post-1992
Cadbury Report on governance codes and OECD principles (1998 & 1999), and corporate
governance has not yet settled at any universally accepted definition.
History of Corporate Governance in India
Before making details into literature review, it entails to discuss the development of corporate
governance practices in world. Globally, Cadbury Committee was set up in May 1991, in the
United Kingdom. It was set up, inter alia by the financial reporting Council, the London
Stock Exchange. This committee wanted to improve the overall standard of corporate
governance in financial reporting and auditing by clearly defining the responsibilities and its
expectations from those involved. The Cadbury Report states “Corporate governance is the
system by which companies are directed and controlled. The Boards of Directors is
responsible for the governance of their companies”. Shareholders should be concerned with
appointing the directors and auditors such that an effective governance structure is created.
The board should be responsible for making the company strategies, guide and lead the
company to put them into effect, supervise the management and report to stakeholders.

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However, the board’s actions are subject to rules and regulations. Their acts should be legally
recognized. The Cadbury Committee made nineteen recommendations.
Blue Ribbon Committee was formed under the direction of the United States Securities and
Exchange Commission. It was constituted to develop recommendations to enable “audit
committees to function as the ultimate guardian of investors’ interests and corporate
accountability”. The committee recommended enclosing ‘Statement of Disclosure by Audit
Committee to the shareowners’, and certificate of Statutory Auditors regarding
Independence’. Euroshareholders Corporate Governance Guidelines 2000 are more specific
and detailed. It has given ten recommendations on disclosure of information in the annual
reports. It states that “a company should aim at maximizing shareholders value in the long
term. Companies should clearly state (in writing) their financial objectives as well as their
strategy, and should include these important ones in the Annual Report”. Some of the
important recommendations are: (1) Shareholder’s approval is required for major decisions
which can affect the standing of shareholders within the company. This approval is also
necessary for important decisions which may deeply affect the risk profile, organization, size
and the nature of the business. These decisions can also be approved by the AGM. (2) There
should be no bias involved in electing the auditors. The entire process of election should be
very transparent. Auditors should be independent and elected by the general meeting. (3)
Shareholders should be provided price sensitive information through regular as well as
electronic means.
Corporate governance has assumed great significance in India in the recent past. Despite the
Companies Act, 1956, outlining a structure for Corporate Governance, defining the board’s
authority and responsibility, and creating an arrangement of checks and balances with penalty
for breaking the law, a need was felt for a comprehensive code of corporate governance. In
India, the confederation of Indian Industry (CII) tried to fill in this gap by outlining a code of
corporate governance in April 1988 followed by the Ramakrishna Commission on PSU
corporate Governance and the recommendations of the Kumar Mangalam Birla Committee
on Corporate Governance in December 1999. CII’s code – Desirable Corporate Governance
in India- emphasized the frequency of board meetings, removal of Financial Institutions (FI)
from the management where shareholding is less than 10%, withdrawal of FI’s nominees
from the board of companies which are not defaulting in loan payment, transparency in credit

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ratings of financial instruments, removal of restrictions on the takeover of companies and
debarring companies from accepting further deposits (CII Report, 2003).
The Ramakrishna Commission on Public Sector Undertakings (PSU’s) corporate governance
emphasized autonomy in professionalizing the board, providing incentives for the top
management, accountability, autonomy in price fixation, strengthening investors interface,
power to dispose of assets, providing for elected directors, setting up a pre-investigation
board, freedom in investing within certain limits, and power to enter a joint venture
(Ramakrishna Commission Report, 1999). Security and Exchange Board of India (SEBI’s)
Kumar Mangalam Birla Report has been enshrined in clause 49 of the listing agreement of
every Indian stock exchange. A beginning has been made in India for mandatory observance
of corporate governance practices, through clause 49 of the Listing Agreement of the Stock
Exchanges. The recommendations of the committee are mandatory. The mandatory
recommendations of the Report are:
▪ Half the directors on the board should be independent if the chairman is executive and one-
third if the chairman is non-executive.
▪ The audit committee will investigate reasons for financial transparency. The committee
should have minimum three non-executive directors. The majority of these directors should
be independent. At least one director should have some knowledge in the field of accounting
and finance. The audit committee should meet at least three times a year.
▪ The board of companies should meet at least four times a year.
▪ A remuneration committee should be set up to determine the remuneration packages,
including performance-linked incentives, stock options etc, of the executive directors.
▪ A committee should be formed to study investor’s complaints.
▪ The chairman of all the committees should be present at the AGM to answer the
shareholders’ queries.
▪ The directors cannot be members of more than 10 committees across companies and cannot
chair more than five committees.
▪ The annual report should have a section on corporate governance reporting the status of
compliance.
▪ The non-executive chairman should be provided with an office and the expenses should be
reimbursed to make him effective.
▪ The annual report should have the detailed resumes of newly appointed directors.

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The non-mandatory recommendations of the committee are:
▪ “Non-executive Chairman to maintain Chairman's Office at company's expense.
▪ Board to set-up a Remuneration Committee to formulate company’s remuneration policy on
specific remuneration package for Executive Directors.
▪ Half-yearly declaration of financial performance including summary of significant events in
last six months to be sent to shareholders.
▪ Company may move towards regime of unqualified financial statements.
▪ Company may train Board Members in the Business Model of the Company as well as risk
profile of the business parameters of the company, the responsibilities as Director and the
best way to discharge them.
▪ The evaluation of performance of non-executive Directors by other members of the Board
and to decide to continue or otherwise of the Directorship of the non-executive Directors.
▪ The Company to establish the Whistle Blower Policy for reporting management concerns
about unethical behaviors, actual or suspected fraud, etc”. (Pradhan & Pattnaik, 2003)
A significant amount of research has been done on corporate governance practices in the
Indian context. Mukherjee (2002) argues that India has been moving closer to taking on an
Anglo-American (Anglo-Saxon) form of corporate governance. But the author questions the
usefulness of the Anglo-American model. She answers this question through an assessment
of the "development impact" of the new model as pointed out by measures such as growth,
employment and respect for shareholder rights. The results suggest that the Anglo-American
model is not very effective in meeting the objectives of the social system in India.
Rajesh Chakrabarti (2005) said that the problem of corporate in India is different from that of
the Anglo-Saxon environment. In India, the problem is the exploitation of minority
shareholders by the dominant shareholders, whereas in the Anglo-Saxon environment, it is
exploitation of shareholders by the managers. The author argues that in the Indian context,
the capital market is more capable of disciplining the majority shareholders than the
regulators. The regulator can just facilitate the market to ensure corporate governance. It
cannot enforce corporate governance effectively, since it involves micro-management.

21
Sarkar and Sarkar (2000) provided evidence on the role of large shareholders in monitoring
company value in the Indian context, whose corporate governance system is a hybrid one.
Similar to other studies, this study also found that after a definite level of block holdings by
directors the company value enhances. But it did not find any substantial proof that
institutional investors, normally mutual funds, are active in corporate governance. The
outcome advocates that lending institutions start supervising the corporation efficiently only
after the equity holding cross a considerable value and this supervision is reinforced by the
level of liability of these corporations. The study provides substantial proof that company
value is enhanced by foreign equity ownership. In general, the analysis supports the view
emerging from developed country studies that the Identity of large shareholders matters in
corporate governance.
The study by Mohanty (2003) suggests that companies with good corporate governance
measures are easily able to borrow money from financial institutions as compared to
companies with poor corporate governance measures. Moreover, there is evidence that
mutual funds have invested money in companies with a good corporate governance track
record as compared to companies with a poor CG track record. By making use of a
simultaneous equation approach, this study wraps up by saying that this positive relationship
is a result of the “mutual funds (development financial institutions) investing (lent money) in
companies with good governance records” and also because “their investments have helped
to enhance the financial performance of such companies” (Mohanty, 2003).
Irrespective of the business goal considered, effective governance guarantees that the
administration (managers and the board) are responsible for achieving it. The job of
successful corporate governance is of immense significance to society as a whole. In the first
place it promotes efficient use of scarce resources both within the organization and the larger
economy. Secondly, it makes the resources flow to those sectors or entities where there are
efficient production of goods and services and the return is adequate enough to satisfy the
demands of stakeholders. Thirdly, it provides a broad mechanism for choosing the best
managers to administer the scarce resources. Fourthly, it helps the managers to constantly
focus on enhancing the company performance, ensuring that they are sacked when they don’t
succeed in doing so. Fifthly, it puts pressure on the corporation to abide by the law as well as
achieve what the society expects from it. And last but not least, it assists the supervisors in
regulating the entire economic sector without partiality and nepotism.

22
Governance in banks
It’s impossible for one to think about financial organizations including banks without proper
corporate governance. Since banks have a very crucial role to play in the economy (financial
and economic system) of any developing country, hence any fault on their part due to
immoral practices creates a situation which may adversely affect not only the shareholders
but the people who have deposited money and the economy at large.
The effectiveness of sound banking system can be recognized by the standard of transparency
in their performance and the increased role of government and regulatory agencies to verify
their actions (Topalova, 2004). The lack of transparency tempts the management to resort to
unethical practices as well as siphon off funds. Inadequate action by regulatory agencies put
blanket on the omission and commission of such unethical practices, thus leads to bank
failure and loss of public faith.
The prevalence of banking system failure has been a common phenomenon in developing and
transition countries as in the industrial world (Honohon and Daniela, 2000). The structural
changes in the banking industry in the form of development of latest technologies, main
industry consolidation, globalization, and deregulation have got the banking industry at a
strategic junction. Hence, banks face a more competitive and volatile global environment
than so called stereotype situation of management. They are engaged in a number of
innovative services like providing required finances to commercial projects, fundamental
financial services to majority of the population and key to all the “payment systems in micro
environment”. Other than this, some banks provide additional credit in times of market crisis.
The banking sector may be closely monitored by the public due to its nature of transactions
and some bad precedents in the past. This sector is very sensitive as a small mistake can
easily attract negative publicity. It is a part of corporate governance with most of its
management obligations enclosed in regulatory regulations. In the light of the above
statement governance issues in banks, more particularly in Public Sector Banks (PSBs),
assume immense significance, but unfortunately these are less discussed and deliberated
upon.
Although the primary reason identified for it is the prevalence of government ownership
across the institutions, another important reason can be attributed to the multiplicity of

23
regulatory and supervisory legislations. For instance, in India there are 5 legislations, e.g.
RBI Act, SBI Act, Bank Nationalization Act, Banking Regulation Act and Companies Act,
which govern the banking sector. Because of this multiplicity of Acts and their enforcing
agencies, i.e. RBI and GoI, any concrete form of principles on bank governance is yet to
emerge.
The full applicability of corporate governance principles in Indian Banking sector is less
apparent. Firstly, there are definitional issues of serious nature, which should be strictly
adhered by Indian banking sector. Secondly, there are issues of temporal, sect oral and
structural nature that have bearing on their relationship. More specifically, the literature on
bank performance and corporate governance is scanty in India as well as abroad. Although
the literature on corporate governance in developing countries has lately got a lot of interest
from the scholars in their previous research (Oman, 2001; Goswami, 2001; Lin, 2001;
Malherbe and Segal, 2001), the execution of corporate governance characteristics of banks in
developing countries has been almost unnoticed by researchers (Caprio and Levine, 2002).
Even research studies on corporate governance in banks are rarely found in the literature in
developed economies (Macey and O’Hara, 2001).
In developing countries, corporate governance in banks is of paramount significance as they
play a vital role in the economy’s financial structure and also act like a catalyst in the
economic growth of the country (King & Levine 1993 a, b; Levine 1997). Second, banks in
developing economies provide an easy source of financing to most of the organizations as
their financial markets are yet to mature. Third, banks offer a universally accepted mode of
payment, hence they are considered as a warehouse of public’s savings. Fourth, due to
liberalization/privatization, many developing countries have liberated the economic
regulations as a result managers are in search of proper governance mechanism.
Coming to a developing country like India, all attributes of governance mechanism can be
easily implemented due to many complexities involved in it. In a developing economy such
as India, the growth of efficient corporate governance principles in banks has been partly held
back due to weak legal protection, poor disclosure prerequisites and overriding owners (Arun
and Turner, 2002a). Moreover, the private banking sector is purposely opting to ignore
certain corporate governance ethics as it has vested interest of some parties (Banaji and
Mody, 2001).

24
The economic liberalization in India created many genuine corporate governance issues for
government owned bank. On the one hand, government encouraged private players to come
up and compete with government owned banks, on the other hand, not giving a cushion to
protect them from unfortunate misgovernance. If privatization is the slogan of the day, then
there must be sufficient deposit insurance proposals and supervisory provisions instituted so
as to safeguard the interest of people who deposit money and avoid a financial collapse (Arun
and Turner, 2002b). Therefore, the pertinent question arises, can the government guarantee
that it would facilitate all mechanisms to private capital owners for smooth operation of
banking.
In spite of over 10 years of financial reforms in India, the Indian government is yet to play a
crucial part in many aspects like board member appointment. However, they have given some
power to public sector banks to make them competitive. The impact of these reforms has
been that the private sector banks now have more independence in formulating strategies for
different sectors of business which include setting up branches and introducing innovative
products (Muniappan, 2002) but yet this autonomy is limited, as they have to abide by the
rules and regulations given by the government and central bank (AGCG, 2001).
Based on statistical report, it can be aptly said that greater state ownership of banks, lesser the
chance of good financial performance (Barth et al 2000). Agreeing on the same line, World
Bank (2002) also voiced the same concern on state ownership and political interference. In its
report it observed that: i) Recent studies indicate that state ownership of banks is inversely
related to bank competence, saving and borrowing, productivity and growth; ii) However,
there is no proof which suggests that state ownership reduces the chances of banking crisis;
iii) The evidence clearly states that state bankers are subject to political clash that usually
leads to weak performance; and iv) Privatization is perhaps the only way to guarantee that
freedom from political decision making can enhance governance in banks.
The report of the Advisory Group of Corporate Governance (AGCG, 2001) recommended
that depositors being the major stakeholders in banks, whose interests may not always be,
recognized, sound corporate governance should consider their interests and ensure that
individual banks are conducting their business in such a way as not to harm interests of
depositors.

25
A discussion above clearly brings out the fact that the government wants to hold some kind of
control in ‘privatized’ public enterprises. This shows the government’s concern that those
enterprises might pursue shareholder’s objectives (other than government), even by ignoring
interests of the community and other stakeholders. It is also possible that the government is
unsure whether it would be required to use those enterprises as instruments as ‘model
corporate citizens’. Institutional investors would like those enterprises to play the game as is
being played by other private sector enterprises. Therefore, it will be difficult to avoid the
conflict between interests of two major shareholders namely, the government and the
strategic partner in a privatized public enterprise.
The key issues in corporate governance in public sector are:
(a) What should be the corporate objective of a public sector unit?
(b) In protecting the rights of employees, the community and other stakeholders, should it stretch
beyond enforcing legal rights of those stakeholders?
(c) Should it be burdened with higher ‘social obligations’ as compared to its counterpart in the
private sector?
(d) In which situations and how the government should exercise control on its operations with
the framework of the Companies Act, 1956?
(Source: Public Enterprises Survey 1997-98)
The government should resolve these issues and come out with clear policy guidelines.
Government’s effort to push privatization without resolving these issues might do irreversible
harm to the economy. We must accept that there is still a need to build infrastructure, to
create employment and to promote balanced regional development. In all likelihood, market
forces will not allow the government to use privatized public enterprises to achieve these
objectives.
Disciplined financial disclosure, which is the hallmark of good governance enhances the
information environment for the mangers and ultimately leads to better economic
performance. There are three channels through which financial accounting information
improves economic performance, better identification of good vs. bad projects by managers
and investors, governance role of financial accounting information, and reduction in
information asymmetries among investors (Bushman and Smith, 2003).

26
Kumar Mangalam Committee (1999) clearly states that “the fundamental objective of
corporate governance is the enhancement of shareholders values, keeping in view the
interests of other stakeholders”. The above survey of literature highlights some issues related
to corporate governance and stakeholder’s interest which provide inkling to the ultimate goal
of a bank i.e. the enhancement financial wealth of different stakeholders, which can only be
done through the improvement of performance.
Role of Governance in banks
From the banking industry perspective, the attributes of corporate governance provide
guidelines to the directors and the top level managers to govern the business of banks. These
guidelines relate to how banks establish corporate aims, carry out their daily activities, take
into account the interest of stakeholders and making sure that the corporate activities are in
tune with the public expectations that banks will function in an ethical and legal manner
thereby protecting the interest of its depositors (Basel Committee, 1999). All these broad
issues relating to governance apply to other companies also, but they assume more
significance for banks because they deal with public deposits directly.
Many international bodies have formulated a clear set of guidelines for the implementation of
corporate governance principles, however the reality prevalent in various countries shows
that there is no universally correct solution to structural problems and that the rules and
regulations need not be constant in different countries. As a result of this, sound governance
practices were formulated by Basel committee. Recognizing the diversity in the structure of
governance mechanism across the countries the Basel Committee (1999) recommended four
important forms of oversight that should be included in the organizational structure of any
bank in order to ensure appropriate checks and balances : (i) oversight by the board of
directors or the supervisory board; (ii) oversight by individuals not involved in the day-to-day
running of the various business areas; (iii) direct line supervision of different business areas;
and (iv) independent risk management and audit functions. In addition, the committee also
emphasizes the significance of the main employees being mentally and physically healthy for
their work.
In comparison to other sectors, governance in banks is significantly more intricate. Public
Sector Banks (PSBs) endeavor to conform to the same system of board governance as other
organizations, however, other elements such as risk management, capital adequacy and

27
funding, internal control affect their “matrix of governance”. It has been observed that 63
percent of PSBs have potentials for profitability increase through efficiency improvement
(Kumar & Verma, 2003), which ultimately depends on the quality of governance. Being
under government control PSBs are handicapped in many respects. As regards the issue of
corporate governance in banking organization, Jalan (2001) has examined the issue of
corporate governance in public versus private sector banks and thereafter Reddy (2002) has
discussed the governance challenge in public sector banking. “Corporate governance in PSBs
is important, not only because they dominate the banking industry, but also because, they are
unlikely to exit from banking business though they may get transformed. To the extent there
is public ownership of PSBs, the multiple objectives of government as owner and the
complex principal-agent relationships cannot be wished away”. Some important troubled
areas are hindering the best governance practices in these banks. These grey areas are
identified and elaborated in the following paragraphs (Reddy, 2002).
Areas of Concern: Ownership
Public Sector Banks (PSBs) are state-controlled banks and their boards are dominated by
representatives from the various sections of society. The need of the board being the guardian
of the shareholder’s welfare has not found favor in these banks, obviously because of the
largest shareholding by the government of India (GoI). Since these banks command the
largest volume of business in terms of deposits and credits, the composition of their boards is
of critical importance. Particularly, the presence of outside professional directors, i.e. of those
from outside RBI and GoI, is crucial for their effective governance. From the actual
experience of PSBs, it shows that the dominance of government representative directors in
most of the PSBs has proved to be counterproductive. In fact, it often serves to distort the
incentive structure, erode discipline and reaffirm the faith of these institutions in the “deep
pockets” of the government (RBI 2001b).
The state control of PSBs has thus belied the expectation of the nation as well as landed the
financial sector in more trouble. It is aptly said that on average, greater state ownership of
banks tends to be associated with a more poorly operating financial system (Barth et al 2000).
Similar doubts for state ownership and political interference were also raised by The World
Bank in one of its reports in 2002. The management bodies of PSBs do alter the strategies
and objectives of the bank as well as the internal structure of governance. This also prevents
cutthroat forces, restricts the efficiency of government monitoring in the financial division,

28
and tends to raise the opacity of banks’ business. The government uses state-owned
institutions to sustain too much spending and to support less-than-creditworthy borrowers.
All these tendencies dampen overall economic growth. In addition, the government often
operates establishments, or the regulatory procedure that manage them, in ways that reduce
the growth of vibrant private sector contenders. (Barnier, 2001)
Composition of the board
The dual charge of Managing Director and Chairman with one person is another cause of
worry in most of the PSBs. On the one hand, this helps in removing the rivalry between the
two positions and, on the other, it reduces the board’s ability to fulfill its proper governance
function as an independent body (Dayton, 1984). A proper trade-off between the duality and
non-duality of the highest post is thus crucial for institutions like banks, more particularly in
PSBs, where the senior directors are nominated by the government. Who is the real boss can
be a matter of confusion. The board’s leadership structure can be conceptualized as a double-
edged sword that forces it to choose between the contradictory objectives of unity of
command and effective monitoring (Finkelstein and Aveni, 1994). Definitely the dual
structure comes with costs; it carries the potentialities of rivalry and conflict between two
posts. The non-dual structure, which is not conducive to effective governance, is even more
detrimental. Concern was also raised by the Ganguly Committee (RBI, 2002) in this regard.
Unless one is mistaken, in the public sector institutions (banks), what is being visualized is
that the Chairman and the MD would both be full-time executives. This will definitely lead to
a bi-polar relationship with “blood-letting internecine feuds” (Tarrapore, 2002). Another
issue arises with the composition of executive and non-executive directors on the board and
their autonomy.
Governance through committees
The experience of Indian banking, so far as institutionalizing the different committees is
concerned, is not encouraging. The status of banks in both public and private sectors reveals a
gloomy picture. The leaders in the respective sectors, i.e. SBI and ICICI Bank, have
established few committees, but are still short of the international standards. Other banks in
the public sector are yet to establish many of them.
The core of governance depends on transparency and disclosure. The most important
committee, audit committee, being the watchdog, provides adequate stuff for achieving this
most important objective. An audit committee provides overseeing the selection and removal

29
of auditors, evaluating and endorsing the extent of audits, deciding upon the regularity of
audits, obtaining audit reports and making sure that management is taking corrective
measures in time to control failures. Audit committee also supervises the banks internal and
external auditors. Autonomy of this committee can be primarily increased by appointing
external board members with expertise in banking or finance and accounts.
This committee needs independent, qualified leadership and membership, which are lacking
in PSBs. A key determinant of the effectiveness of an audit committee is the independent,
competence, dedication and leadership skills of the audit committee chair (Blue Ribbon
Commission, 1999). Financial literacy among its members and their independence of the
owner are very crucial to its effective functioning. Since in PSBs the members of this
committee are drawn from the pool of representative directors, there is always a question
mark hanging over their effectiveness.
Table 1: Committees set up by Indian banks
Committees set up by banks SBI ICICI Bank UTI
ALM Y Y Y
Audit Y Y Y
Compensation/ Remuneration N Y N
Risk Management N Y N
Investor’s Grievances Y Y N
Credit N Y N
Business Strategy N Y N
Nomination N N N
Y – Yes, N – No Source: Latest Annual Reports
Risk management, being the backbone of any financial institution, is also very crucial to
banks. They face a gamut of risks which are complicated in nature and require specialized
hands to handle. These include credit risk, exposure concentration risk, connected exposure
risk, interest rate risk, exchange rate risk, equity risk, legal risk, operational risk, liquidity
risk, reputation risk, payment system interface risk and business continuity risk. Only a well-
manned risk management committee can identify these risks and manage them properly. As
per the latest annual reports, most of the PSBs have not yet established any risk management
committee, which exposes them to the risk of taking faulty decisions in many operational
areas resulting in serious trouble. Most of the PSBs have established the first two committees,
as listed in Table 1. But merely forming these two does not come handy when many of them

30
have already raised capital from the capital market. Besides, business-related committees,
investor protection committee and nomination committee are of vital importance.
Critical Analysis of Literature
After studying the literature on corporate governance some concrete meanings came out
which would be studied thoroughly in the subsequent research. Since it is impossible for
these owners to directly manage or even supervise these corporates, they appoint their
representatives as Board of Directors. The Board appoints the top management, who in turn
appoint other managers and employees. As put out succinctly by the Kumar Mangalam
Committee: “The pivotal role in any system of corporate governance is performed by the
Board of Directors. It is accountable to the stakeholders and directs and controls the
management. It stewards the company, sets its strategic aim and financial goals and overseas
their implementation, puts in place adequate internal controls and periodically reports the
activities and progress of the company in a transparent manner to the stakeholders”. (Kumar
Mangalam Birla Committee Report, 1999)
With the rapid pace of financial innovation and globalization, the face of banking is
undergoing a sea change. Banking business is becoming more complex and diversified. In the
changed scenario, it is essential that the Boards of banks are fully geared to govern the banks
well. The objective of governance in banks should first be protection of depositors’ interest
and then be to optimize the shareholder’s interests. While doing so, the foremost
responsibilities should be to ensure fair and transparent dealing without giving a chance of
mis-governance.
The governance issues in banks cannot be understood independently. The regulatory
framework has significant implications for the corporate governance of banks. There is a
growing realization that the corporate governance arrangements of banks are significantly
different in comparison to firms in other sectors. The corporate governance of banks is a
complex issue. It has been observed that the legal and regulatory framework, in which banks
operate, makes the governance mechanism of hostile takeovers ineffective as a method of
corporate governance. Thus, governance issues in banks have to be discussed in an
environment where a bank’s management has a considerably reduced threat perception from
the market for corporate control.

31
Chapter – 3
RESEARCH METHODOLOGY
Introduction
Since the focus of the research is on evaluating corporate governance in Indian Banking
sector, the focus is on corporate governance outcomes rather than on corporate governance
mechanisms. Specifically, the author examine the effectiveness of corporate governance in
Indian banking sector in achieving economic growth, curbing malpractices, bringing
transparency of banking transactions, and how it can be mandatory. As reflected from
previous research Jalan (2001) and Reddy (2001), there has been growth in the Indian

32
banking sector during the post liberalization period, can be attributed to good governance.
This research throws light on the efficacy of corporate governance in achieving transparency
and good banking growth in India The research philosophy for the underlying topic reflects
the principles of interpretivism. This reason why this approach is taken is because
interpretivism calls for finding and extracting “the details of the situation to understand the
reality or perhaps a reality working behind them” (Saunders et al, 2003). Hence, the research
methodology was prepared meticulously to identify the effectiveness of corporate
governance.
This chapter deals with research design, collection of the data and methodology used for the
research purpose. This section of the dissertation has been developed to explain the logic and
rationale behind the research methods used. The idea is to demonstrate that the chosen
approach has been appropriate and the findings of the research are both applicable and
dependable. From the perspective of time horizon, this research will be classified as
longitudinal research (Saunders et al, 2003). This is because the research will be studying the
developments and the changes that taken place in the Indian Banking sector over the past
years.
Research Approach
Approach can be classified according to their purpose and research strategy used. The
classification most often in three folds one of exploration, description, and explanation.
Exploratory Research
Exploratory research is “valuable means of finding out what is happening; to seek new
insight; to ask questions and to assess phenomena in a new light”. This research in general is
quite flexible in nature. The main purpose behind this research was to identify the potential
opportunity existing in the market. Like descriptive research, exploratory causal research is
also based on a planned and structured design. Exploratory research emphasizes on the
discovery of new ideas. It deduces large and unclear problem statements into more accurate
sub-problem research propositions and hypotheses. “Exploratory research is characterized by
support from secondary data with lot more flexibility and it tends to based on subjective
evaluation of survey results’’ (Tull D.S. & Hawkins, D.I. 1990).

33
Explanatory Research
A clear statement of the decision problem, specific research objectives and detailed
information are the highlights of this research. It is quite structured and statistical in nature. It
describes the commitment of banks in adhering corporate governance principles taken from
their annual report. This research will explore and explain how the Indian banking sector is
doing its business in post implementation period.
The Research Method
The research relies on the use of the deductive method. There are different ways of
conducting a research as Yin (1994) mentioned five major research strategies namely
experiment, survey, case study, archival and history.
Research
Strategy
Form of Research
question
Needs Control over
Behavioral Events
Focuses on
Contemporary Events
Experiment How, Why Yes Yes
Case Study Why, How No Yes
Survey Who, What, Where,
How, How much
No Yes
History How, Why No No
Archival Who, What, Where,
How, How much
No Yes/No
Source: Yin (1994) pp-6
For this study, the author has used both primary and secondary data. Primary data was
collected from questionnaire survey and interview. The author met with the interviewees in
their office and gave them a small questionnaire on corporate governance to complete. Prior
to this the author had a brief discussion with the interviewees on the questionnaire and
accordingly notes were taken on the basis of this. However, only a few interviewees gave
permission to use these notes in the research analysis. The small questionnaire was handed
over to them to score the important attributes of corporate governance. The secondary data
was collected from literature, academic articles, and information provided in annual reports
and websites. Secondary sources have been extensively used to identify the corporate
governance practices by banks in India. Primary research has been used in the analysis in a
qualitative way to identify the effectiveness of corporate governance practices in India.
A. Primary Research

34
The main objective of primary research was to elicit the valuable opinion of senior bank
professionals who can provide valuable insight and information about the implementation of
corporate governance practices in the recent past. Considering these objectives and literature
review, the questionnaire was prepared in a manner to derive the opinion of bank
professionals regarding attributes of corporate governance principles and its contribution to
the banking business.
Qualitative data
Qualitative research is called so “because its emphasis lies in producing data that is rich in
insight, understanding, explanation and depth of information, but which cannot be justified
statistically” (Crouch S & Housden M, 2003). Since the banks were an important source of
information, interview method of data collection along with their opinion on the attributes
through questionnaire survey with senior manager of different banks in Delhi were arranged.
B. Secondary Research
Secondary research was very important and was helpful in aligning the findings of the
primary research to the facts derived from the secondary research. Many national and
international journals have been used to collect the necessary facts and figures on Indian
banking industry. Reports of the RBI (Reserve Bank of India) were also used.
Research Design
A research design was devised in a more traditional fashion specifying the research
strategy. The research strategy will use the multi- methods approach to dig in and gather
more information about corporate governance. The growth of banking business in India is
phenomenal as it is being reflected by the entry of private banks and foreign banks. However,
the growth of banking business is linked with successful implementation of corporate
governance principles.
The following steps were done in order to make research design successful.
 Data collection
 Sampling criteria

35
 Data analysis
A. Data Collection
The interview/questionnaire mechanisms were used very systematically to elicit views on
corporate governance attributes. The preparation of such mechanism was quite meticulous
bearing in mind each question should make contributions to the research objective (Proctor T,
2003). Since this research required lot of secondary data to complete the analysis, the
websites of banks and their annual reports were extensively used.
B. Selecting a Sample for Questionnaire
Samples can be of two natures: Probability samples and Non-Probability samples. The
Probability sample implies that everyone within the subsets of the population has a non-zero
probability of selection. Non-probability samples on the other hand imply that no attempt is
made to ensure that a representative cross section of the population is achieved (McDaniel
and Gates, 1996).
Selecting a sample procedure for this dissertation was never an easy task because it is tough
to get a chance to interview senior bank professional and easy access to fill up questionnaire
through senior officials. The sample procedure used in the questionnaire is non-probability
sampling due to the nature of data available. The use convenience sampling is made; as the
questionnaires have been, send to senior banking professionals. The sample size for the
questionnaire was 10 respondents.
Reliability and Validity of the Research
To ensure the authenticity of the research in synchronization with the very objectives were
laid out for this dissertation certain firewalls were employed that make this research reliable
and valid. The data collected was analyzed and the analysis was made from the primary and
secondary sources of data using the deductive method.
Limitations of the Research
▪ The limitation of the research is the lack of primary data collection due to difficulty in getting
appointment with senior bank official in banking industry.

36
▪ The sample size is very small in comparison with the nature of the research. Study of attributes
of corporate governance with interview of 10 people seems quite less and unrepresented.
▪ Time and recourses constraints restrict the scope of the research. Despite my effort to expand
the scope of the research by getting into more in-depth study of corporate governance, it was
not materialized due to the practical difficulties faced during the work.
▪ Although prominent banks have been incorporated in the sample, judgmental sampling seems
little biased and inaccurate results might surface.
CHAPTER-4
Analysis and Interpretation
Introduction
This current research tries to study the attributes of corporate governance practices which
exist in the Indian Banking sector within the strict authoritarian structure. It tries to evaluate
the implementation of corporate governance attributes by bank (private and public sector).
Also the author tries to assess the competence of these banks in terms of substance and
quality of reporting in their annual reports. For this purpose an empirical study has been
undertaken on ten banks (six public sector bank, three private sector bank and one foreign
bank) operating in India. The research has been undertaken to assess the level of compliance
of key governance parameter in these banks in tune with statutory and non-mandatory

37
requirements given by SEBI (Securities Exchange Board of India) under clause 49 of the
listing agreement.
Analysis from secondary Research
Empirical Study
1. Sample Size, Period of Study and Rationale: The sample of study comprises ten banks
operating in India. These banks have been selected on the ground that they are renowned
banks in the banking sector in India, and their scrips practically dictate the movement of the
stock market in the country. The public sector banks are (SBI, Punjab National Bank, Bank of
India, Bank of Baroda, Canara Bank, & Allahabad Bank) and private sector banks are (ICICI
Bank, HDFC Bank, Axis Bank & Standard Chartered Bank), though standard chartered is
considered as foreign bank also. The period of study is one year (2007-08) only as it will
show the latest development of corporate governance attributes in banks. The fundamental
reason behind selecting 2007-2008 as the period of study is that SEBI initiated few new
clauses, recommended by various committees in its revised clause 49 of listing agreement on
29th
October, 2004 (Das, 2007). Thus, it’s quite sensible to evaluate the situation which
highlights the status of CG observance by these financial institutions. Considering this, the
2007-2008 annual report of banks was considered appropriate for this study. This would
definitely provide some useful insight about the present state of corporate governance
practices and disclosure norms. To evaluate the structure and procedure of corporate
governance adopted by banks commitment to adhere it in their annual report. As a result the
author has conducted a comparison study based on statutory and non-mandatory requirements
stipulated by the revised clause 49 of the listing agreement and provisions required by the
Banking Act.
2. Analysis: After getting the corporate governance attributes from bank’s annual report, the
analysis is prepared in two separate parts: a) Shareholding pattern in Public and Private sector
banks, b) Key governance parameters and their compliance status in these banks.

38
Table 2- Share Holding Pattern of Private and Public sector Banks in India
PUBLIC SECTOR BANK PRIVATE SECTOR BANK
ATTRIBUTES OF
CORPORATE
GOVERNANCE
SBI Canara
Bank
Allahabad
Bank
Bank
of
Baroda
Bank
Of
India
Punjab
National
Bank
ICIC
I
Bank
AXIS
Bank
HDFC
Bank
Standard
Chartered
Bank
President of India 59.7
3
57.80
Government of India 73.17 55.23 53.81 64.4
7
Life Insurance Corporation
of India
5.81 10.40 2.57
Deutsche Bank Trust
company Americans
28.52
FIIs/NRIs/OCBs/FB/FC/FN 41.21
Insurance Companies 1.74 5.05 7.50 10.75
Banks & Financial
Institutions
7.17 3.05 0.29 1.30 1.56 10.29 0.70
Mutual Funds 4.45 2.73 1.80 11.50 2.77 6.36 5.66
Bodies Corporate 1.24 2.85 1.22 1.26 5.88
NRIs/OCBs 0.04 0.08 0.63
Resident Individuals/HUF /
Trust etc.
5.84 5.77 13.68 6.16 7.34 4.72 7.22
Foreign Institutional
investors
14.00 18.52 19.77 15.1
0
Domestic
Companies//Trusts
3.22 0.76
NRIs/OCBs/FIIs/GDRs 19.5
9
20.07
Employees 0.24
Banks 0.19
HUF/Clearing
Members/Trusts
0.121
SUUTI 27.18
HSBC IRIS Investment 4.95
Orient Global Tamrind Ltd. 4.51
ICICI prudential Life
Insurance Company
Limited
4.08
The Bank of New York 3.64
General Insurance
Corporation of India
2.28
Other Banks/Investment
Company
9.53
JP Morgan Chase Bank
(Depository for ADS)
21.61
Housing Development
Finance Corporation
Limited
14.80
HDFC Investments Limited 8.46
DBS Bank Ltd 3.28
Bennett, Coleman & Co
Ltd
2.50
The Growth Fund of
America
1.87
Euro Pacific Growth Fund 1.67
JP Morgan Asset
Management (Europe)
1.43
J P Morgan Advisors 1.12
Source: Annual Report Survey, 2007-08. Shareholding pattern of Standard Chartered Bank is not showing in
their annual report.

39
Observation from table: The maximum stake in Public sector banks is kept by government
whereas private sector banks are predominantly controlled by foreign promoters.
Management and control of private sector banks is delegated to professional managers under
the governance of board controlled by the foreign promoters whereas all public sector banks
are managed by their banking board under the control of government of India. FIIs have
considerable shareholdings in both public as well as private sector banks. The insurance
companies also hold shares in both public and private sector banks.
Considering the report of Kumar Mangalam Committee on Corporate Governance, “the
fundamental objective of corporate governance is the enhancement of shareholder value,
keeping in view the interests of other stakeholders”, many managers manipulated the profits
of banks to show illusory profits of the banks and thereby enhance market value of shares.
However, the shareholding pattern of public sector bank justifies the views of Barth, Capiro
and Levine, (2000) and World Bank (2002) as they are under government patronage. The
possibilities of misgovernance cannot be ruled out in public sector banks compared to private
sector banks. The shareholding patterns of private sector banks are evenly allocated among
various groups of shareholders unlike public sector banks.
Key Governance Parameters & Compliance Status
There are some key governance parameters that can measure to ascertain the implementation
of corporate governance in banks. Some of them are discussed below:
▪ Bank’s philosophy on Corporate Governance:
The philosophy of the Bank lies in its commitment to uphold some unique values that is
based on the Idea of a bond and togetherness among all interested parties, particularly a close
ties between the Bank and its many stakeholders-from customer and employees to its
investors, institutions and society at large. So, overall objective is to optimize sustainable
value to all stakeholders-depositors, Shareholders, customers, borrowers, employees and
society through adherence to corporate values, codes of conduct and other standards of
appropriate behavior. The studies of annual reports of all the banks show that all the banks
are committed to corporate governance.
▪ Board of Directors

40
Various aspects were analyzed from annual reports regarding board of directors’ viz., board
structure, board strength and size, director’s attendance etc.
Table 3: Board Structure, strength and Size of Private and Public sector Banks in India
PUBLIC SECTOR BANK PRIVATE SECTOR BANK
Particulars SBI Canara
Bank
Allahabad
Bank
Bank
of
Baroda
Bank
Of
India
Punjab
National
Bank
ICIC
I
Bank
AXIS
Bank
HDFC
Bank
Standard
Chartered
Bank
1. Total Number of
Directors:
9 13 11 14 15 8 16 11 12 14
a) No. of Executive
Directors (EDs)
i) Promoters 2 3 3 3 3 3 3 3 3 4
ii) Others
b)No. of Non-Executive
Directors (NEDs)
7 10 8 11 12 5 13 8 9 10
2. Total Number and
Percentage of:
i) Executive Directors (EDs) 22 23 27 21 20 38 19 27 25 28
ii)Non-Executive Dir.
(NEDs)
78 77 73 79 80 62 81 73 75 72
Source: Annual Report Survey, 2007-08
As far as board structure is concerned Public sector banks are following Banking Companies
Act 1970 as the Board of the Bank has been constituted under Section 9(3) of the Banking
Companies {Acquisition & Transfer of undertaking} Act 1970 and Nationalized Bank
(Management & Miscellaneous Provision) Scheme 1970. Similarly in private sector banks,
Board of Directors have been constituted in compliance with the Banking Regulation Act,
1949, Companies Act, 1956 and listing agreements entered into with stock exchanges and in
accordance with best practices in corporate governance. The Board functions either as a full
Board or through various committees constituted to oversee specific operational areas. The
practice of dual charge Managing Director and Chairman is seen in all the banks as it can
help to remove the rivalry between the two positions and ensure governance function
independently. The view of K.N. Dayton, (1984) seems to exist in board structure.
Private sector banks have complied with the requirement of the Clause 49 of the Listing
Agreement in regard to the requirement of minimum number of independent directors, while
the chairman is a non-executive director. However, some public sector banks have deviated a
little bit to comply with the conditions of the Clause 49 of the Listing Agreement in this
regard. Clause 49 I (A) of the Listing Agreement requires that not less than 50% of the board
of directors of the company (having chairman as executive director) should comprise of non-
executive directors being independent. As suggested by many scholars and recommendation

41
by various research that good corporate governance implementation entails clear division of
responsibilities at the top management level like Chairman and managing director, which can
ensure a balance of power and authority such that no individual has unfettered powers of
decision. However, study of annual report of ten leading banks and practical difficulties faced
by them in normal management practice conclude that combination of the posts of chairman
and CEO/MD in one person should be publicly justified.
Committee of the Board
Audit Committee: The Audit Committee is constituted as per RBI guidelines and complies
with the provisions of Clause 49 of the Listing Agreement to the extent that they do not
violate the directives/guidelines issued by RBI. In terms of Reserve Bank of India guidelines,
the Audit Committee should have six members on the Board of Directors, including two
whole time Directors, two official Directors (nominees of GOI and RBI), and two non-
official, non-executive Directors. Meetings of the ACB are chaired by a non-executive
Director.
The purpose of audit committee is to oversee the bank's financial reporting process and
ensuring correct, adequate and credible disclosure of financial information. Considering the
aim of audit committee, the following objectives were laid down
▪ Reviewing with the management, the financial statements as per accounting policies and
practices, compliance with accounting standards.
▪ Review the adequacy, quality and effectiveness of external and internal audit, internal control
system.
▪ Audit Committee reviews the position with regard to issues raised in the Long Form Audit
Report (LFAR).
▪ It follows up on all the issues / concerns raised in the Inspection Report of RBI.
▪ Audit committee also makes a review of reports received from Compliance Cell, Inter-
Branch Account Reconciliation (IBAR) section, etc.

42
Table 4: Status of Audit Committee in Public sector & Private Sector Banks
Serial
No.
Particulars Private Sector Banks Public Sector Banks
1. Members and other
composition of the
committee.
Committee consists of
mostly 6 Directors, of
whom 2 whole-time
directors, 2 official
directors, 2 non-executive
director.
As per provisions laid down
by section 49 of the listing
agreement.
2. Information about
members of
committee
meetings.
Clearly mention as per
guidelines of Section 49 of
listing agreement.
Clearly mention as per
guidelines of Section 49 of
listing agreement.
3. Information
meeting attends of
committee
members.
ICICI and HDFC held 6
meetings and Axis Bank
held 12 meetings. Almost
majority members attended
all meetings.
In Public sector banks the
average meetings were 6 in
a year except some
deviation. Maximum
members attended every
time.
audit committee
report.
Mentioned in annual
report.
Mention in annual report.
But details are missing.
Source: Annual Reports 2007-08
Audit committee report is the important ingredients of corporate governance report. Both
private and public sector banks have complied with audit committee laid down by section 49
of the listing agreements. However minute study of audit committee report of all the banks
revealed that private sector banks do comply in better way than public sector banks.
▪ Committee of the Board
Investors’ Grievance Committee: The Investors’ Grievances Committee has been constituted
in terms of Clause 49 of the Listing Agreement. The Committee takes care of investors’
grievances by doing some important functions. It approves and monitors transfer,
transmission, splitting and consolidation of shares and bonds and allotment of shares to the
employees pursuant to Employees Stock Option Scheme. The Committee also monitors

43
redressal of complaints from shareholders relating to transfer of shares, non-receipt of Annual
Report, dividends etc.
Table 5: Status of Investor Grievances Committees in Public sector & Private Sector
Banks
Serial
No.
1. Transparency in
composition of the
committee.
Committee consists of mostly 4 Directors,
of whom 1 director is executive and others
are independent, chairman being an
independent director.
Mostly Committee
consists of 4 Directors;
of who 2 are executive
and the other 2 are NED/
independent, chairman
being an independent
director.
number of committee
meetings.
Items wise breakup of the nature of
queries/complaints not disclosed. Some
complaints pending reported.
Item wise break up of
the nature of
queries/complaints not
disclosed.Some
complaints pending
reported. SBI has taken
up all complaints in
2007-08.
number of committee
meetings.
In ICICI and HDFC more than 10
meetings held. There are 4 members and
almost majority members attended all
meetings.
Four meetings in a year
except Canara bank.
Normally 4 members but
2 or 3 attended every
time.
investor/ shareholder
survey conducted.
No such survey conducted. No such survey
conducted.
Observation from Table 5
1. Both private sectors and public sectors have complied with the requirements of
Clause 49 of the Listing Agreement in regard to composition of the shareholders/
investors grievance committee. They have also furnished required information
regarding the number of committee meetings held during the year to monitor
shareholder doubts and grievances.
2. A good thing was that almost all the grievances which were received, were
disposed off as reported. However these questions and complaints were not split
item wise by any of these companies.
3. These banks failed to carry out a survey on their investors and shareholders level
of satisfaction.
4. These institutions use their external registrars and share transfer agents to carry
out tasks like physical transfer, transmission, splitting of share certificates etc.

44
Remuneration Committee
The status of the remuneration committees in Public Sector and Private Sector are as
follows:
Table 6: Status of Remunerations Committee in Private Sector Banks and Public Sector
Banks.
Information about the Committee Committee consists of 5
Directors, of whom 1
director is executive and
other 4 are independent,
chairman being an
Committee consists of
4 Directors; of whom
2 are executive and
the other 2 are
NED/independent,
chairman being an
Information about Remuneration of
Directors
Clearly mentioned in
annual report.
Clearly mention in
annual report in some
banks.
Information about number of
committee meetings.
Clearly mention with
number of members
attended.
Although mentioned
in annual report, some
banks don’t have
remuneration
committee since it is a
non-mandatory
requirement.
Observation from Table 6
Formation of remuneration committee in a bank is a non-mandatory requirement of the
Clause 49 of the Listing Agreement. However, both private and public sector banks have set
up a remuneration committee in their organizations. Private sector banks have not complied
with the conditions of Clause 49 of the Listing Agreement because the committee consists of
only 2 NEDs against the minimum requirement of 3 NEDs as per the said Clause.
▪ Other Board Committees
i. Nomination committee
ii. Customer Service Committee

45
iii. Fraud Management Committee
iv. Ethics and Compliance committee
v. Investment committee
vi. Share transfer committee
Private sector banks have set up many committees to facilitate the work in line with section
49 of the listing agreement whereas public sector banks have set up many committees but not
all the banks.
Disclosures and Transparency
Disclosure in the reports of corporate governance in the annual reports of private sectors and
public sector banks, as required by the Clause 49 of the Listing Agreement have been studied
in two parts:
A. Statutory requirements/ disclosures
B. Non-mandatory requirements / disclosures
 Statutory requirements/ disclosures
Some of the most important items of disclosures / requirements and their status of compliance
in private sectors and public sector banks are given in Table 7.
 Non-mandatory requirements / disclosures
Some main items of non-mandatory requirements/ disclosures and their status of compliance
in private sectors and public sector banks are given in Table 8.
 General Body Meetings
In regard to reporting of information in a company’s general body meetings, following
information has to be mandatorily included in the annual report:
i. Location and timing of the general meetings which have taken place in last 3 years.
ii. Details of special resolution passed in the last 3 Annual General Meetings or Extraordinary
General Meetings.
iii. Details of resolution passed last year through postal ballot including the name of the
conducting official and voting pattern or procedure.

46
It is observed that both private sectors and public sector banks have provided required
information on items (i) & (ii) above.
Table 7: Items of Statutory Disclosures/ Requirements and their Status of Compliance
in private sectors and public sector banks
Private Sector Banks Items of Statutory Disclosures Public Sector banks
Disclosed as not being1. Significant related party Disclosed as not being
significant / and transactions having potential significant/ and potentially
potentially conflict with conflict with the interests of the conflict with the interests of the
the interests of the bank. banks. bank.
No non-compliance2.
reported.
Non-compliance related to capital
market matters.
No non-compliance reported.
Applicable accounting3.
standards followed without
any material departure
reported.
Accounting treatment Applicable accounting
standards followed without any
material departure reported.
Laid down procedure to4. Board disclosure – Risk Laid down procedure to inform
inform board members Management. board members about risk
about risk assessment and assessment and minimization
minimization procedure procedure for board’s review
for board’s review not not reported.
reported.
Management discussion &5.
analysis report included in
the annual report.
Management discuss and analysis
(MD&A)
Management discussion &
analysis report included in the
annual report.
Disclosed compliance 6.
i)
Shareholders information on:
Appointment of new director / re-
appointment of retiring directors.
) Quarterly results and presentation.
i) Share transfers
Directors’ responsibility statement.
Disclosed compliance
ii
ii
iv)
Source: Annual Reports 2007-08.

47
▪ Means of Communication and General Shareholder Information
As advised by the Listing Agreement, private as well as the public sector banks have
succeeded in giving general shareholder information and accepting a range of communication
means every year.
 CEO & CFO Certification
As per clause 49 of the Listing Agreement CEO and CFO certification is compulsory for the
BOD’s of a listed company relating to some precise matters. However, this must be disclosed
in the CG report. After evaluation it’s clear that both private and public sector banks have
fulfilled this requirement. They have succeeded in publishing this certificate in their CG
report.
 Compliance of Corporate Governance and Auditors’ Certificate.
Private sector banks obtained an ‘unqualified certificate’ from a practicing company
secretary’s firm, confirming company secretary’s firm, confirming that the company has
complied with all mandatory conditions of Clause 49 i.e., constitution of remuneration
committee.
In this connection, it may be clearly stated that both Private sector banks and
public sector banks does appear to have sufficient ground for obtaining a clean certificate as
there are glaring instances for compliance of certain important conditions of corporate
governance. There are some areas of non-compliance, but they are non-mandatory in nature.
▪ Disclosure of Stakeholders’ Interests
The central issue highlighted here is the disclosure of many proposals by private and public
sector banks in their annual reports. This also focuses on the action taken by these banks on
the following matter so as to fulfill their obligation towards their stakeholders.

48
Table 8: Items of Non-mandatory Disclosures/ Requirements and their Status of
Compliance in Private sector banks and public sector banks
Private Sector Banks Items of Statutory Disclosures Public Sector Banks
Compliance not1.
disclosed in the
corporate governance
report.
Share holder rights (e.g.,
information & half-yearly
declaration of financial
performance sent to shareholders
Compliance not disclosed in
the corporate governance
report.
Compliance not2.
disclosed in the
report.
Audit qualification Compliance not disclosed in
the corporate governance
report.
No information provided3.
in corporate governance
report.
Training of board members No information provided in
corporate governance report.
Evaluation mechanism4.
not disclosed in
report.
Evaluation of non-executive
directors
Evaluation mechanism
disclosed in some bank
Whistle blower policy5.
by some banks as
disclosed by them in the
report.
Whistle blower policy Whistle blower policy
adopted by some banks as
disclosed by them in the
Source: Annual Reports 2007-08.
It is observed that private sector banks like ICICI and HDFC have disclosed in brief, the
initiatives and measures taken by the bank on the above issues in the annual report 2007-08.
Some public sector banks like Allahabad bank, Bank of Baroda, Bank of India & Punjab
National Bank explained in details, various initiatives and measures taken by them to
facilitate governance mechanism. But the fact remains that none of these banks disclosed
their policies in regard to EHS, HRD, and CSR & IR in the annual reports.
▪ Share Price Movement

49
Basically, share price movement of a bank in a developing country depends on many factors,
however, public sector banks are government owned and their performance is quite stagnant.
The growths of private sector banks are good and are being reflected from the movement of
share price. The trends of share price movement reflect how investors accept the bank and
corporate governance has indirect impact on the movement of share price.
HDFC SHAREPRICEMOVEMENT
1825
1698
1799 1798
1615
1459 1470
1274
1181
1257 1197
1045
Months
Series1
ICICIBANKSHAREPRICEMOVEMENT
1439
1257
1330 1316
1217
1063
964 950 955 1005 1024
915
Months
Series1
Market
Price
of
Share
Market
Price
of
Share

50
AXIS BANK SHAREPRICEMOVEMENT
1439
1291
956
1025 1013 998
776
678
591 628 643
505
Months
Series1
PUNJAB NATIONAL BANK SHAREPRICEMOVEMENT
685 708 700
560 580
612
510
539 521 542 539 545
Months
Series1
CANARA BANKSHAREPRICEMOVEMENT
421
340
324
280 277
300 313
287 280
299
272
232
Months
Series1
Market
Price
of
Share
Market
Price
of
Sha
Market
Price
of
Sh

51
BANKOF INDIA SHAREPRICEMOVEMENT
465
416
388 381 387
352
276 260
280
206 217
236
Months
Series1
ALLHBAD BANKSHAREPRICEMOVEMENT
143
125 126 122
107 110 112 108
98
82
90 88
Months
Series1
BANK OF BARODA SHAREPRICEMOVEMENT
501
465
407
435
360
331
353
292
319 322
284
251
Months
Series1
Market
Price
of
Sha
Market
Price
of
Sha
Market
Price
of
Sha

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