About Corporate Governance in Public Sector Banks
An Amrita paper titled Corporate Governance in Public Sector Banks was accepted for presentation at the International Conference of Corporate Governance and Business in Boston, USA this past July.
The conference was organized by the Academy of Business and Retail Management Research.
The paper authored by Dr. Mridula Sahay, Associate Professor at the Amrita School of Business, Coimbatore discussed the controls that could enable management of public sector banks to satisfy their stake holders, viz. customers, employees and creditors.
Dr. Mridula wrote the paper in collaboration with Mr. S. Shiva Kumar, Audit Officer, Accountant General (Commercial and Receipt Audit), Andhra Pradesh, Hyderabad.
“With the globalization of business and liberalization policies, the importance of corporate governance has increased worldwide. In India, nationalized and co-operative banks have also been affected,” the co-authors noted.
They explained their insights presented in the paper.
“Generally public sector banks in India hold the savings of the public. In order to increase their earnings, the management of some banks has now begun considering the arena of online e-brokering. They are influenced by the fact that in
recent times, the public is also keen to invent in the share market to get higher returns.”
“The online trading system has increased the efficiency and transparency of dealing in the share market, buying and selling shares from the Bombay Stock Exchange (BSE) or the National Stock Exchange(NSE).”
“Brokerage houses or private banks such as HDFC and ICICI provide online e-brokering services to their clients, earning healthy margins. Although public sector banks earlier ignored this arena completely due to fear of scams and presumption of corporate scandals, now they are beginning to reconsider.”
“Its only a matter of time before they diversify their portfolios and take steps to earn brokerage income, providing competition to private sector banks. Competition will also help bring stability in governance.”
“Globalisation has created many challenges for public sector banks and they will not remain viable unless they can overcome the challenges.”
September 12, 2012
School of Business, Coimbatore