CORPORATE GOVERNANCE IN BANKING SECTOR
Corporate Governance has become a"buzzword" these days mainly due to Globalization and is a key element in enhancing investor confidence, promoting competitiveness and ultimately improving economic growth. It is the set of processes, customs, policies, laws, and institutions affecting the way a corporation is directed, administered or controlled.
Corporate Governance in the present day context encompasses the interest of , not only the shareholders but also many stakeholders, which includes employees, customers, suppliers and the community and complying with the legal and regulatory requirements, apart from meeting environmental and local community needs. Due to the unique role of banks in national and local economies and financial system systems, supervisors and Governments are also stakeholders. A good corporate governance mechanism improves the health of the corporate sector, thus enhancing national competitiveness in India and Challenges

CORPORATE GOVERNANCE IN INDIA CONTEXT
In India the concept of corporate governance is gaining importance because of two reasons:
1.    After liberalization, there has been institutionalization of financial markets. FlIs and FIs became dominant players in the stock markets'
The market began to discriminate between wealth destroyers. Corporate governance is a critical by product of market discipline'
2.    Another factor is the increased role being played by the private sector Companies are realizing that investors love to stay with those corporate that create values for their investors. This is only possible by adopting fair, honest and transparent corporate practices
CORPORATE GOVERNANCE IN BANKS
Corporate Governance has become very important for banks to perform and remain in competition in this era of liberalization and globalization on Banks in a broad sense are institutions whose business handling other people's money. A Joint stock bank also known as Commercial Bank which is nothing but a company whose business is banking' Protecting the interest of depositors becomes a matter of paramount interest to banks. In banking parlance, the Corporate Governance refers to conducting the affairs of a banking.
Organization in such a manner that gives a fair deal to all the stakeholders ie. shareholders, bank customers’' regulatory authority'. society at large, employees etc. The significance 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.
As per Basel committee Report 1999, Banks have to display the exemplary of corporate governance practices in their financial performance in their financial statements and 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. An effective system of corporate governance in banks will impose appropriate standards of conduct on managers and control and monitoring procedures on banks in order to maximize opportunities for legitimate profit subject to the best interests of depositors and shareholders. Good corporate governance regulates the relationships between banks' stakeholders, their Boards and their management. It prevents the abuse of power and self serving conduct, as well as imprudent and high risk behavior by bank managers, and resolves conflicts of interests between managers and board members on the one hand and shareholders and depositors on the other. Indeed, the current state of the world economy is in some measure attributed to the fact that boards and their risk management committees have not properly discharged their duties in exercising oversight on managers engaging in high risk activities. The corporate governance of the financial sector, therefore, has important implications for the stability of the whole economy
From the perspective of banking industry, corporate governance also includes in its ambit the manner in which their Board of Directors governs the business and affairs of individual institutions and their functional relationship with senior management.
This is determined by how banks:
•    set corporate objectives (including generating economic returns to owners);
•    run the day-to-day operations of the business and;
•    consider the interests of recognized stakeholders i.e., employees, customers, suppliers, supervisors, governments and the community and' line up corporate activities and behaviors with the expectation that banks will operate in a safe and sound manner, and in compliance with applicable laws and regulations; and of course protect the interests of depositors, which is supreme.
For ensuring good corporate governance, the importance of overseeing the various aspects of the corporate functioning needs to be properly understood, appreciated and implemented.
There are four important forms of oversight that should be included in the organizational structure of any bank in order to ensure the appropriate checks and balances:
1.    Oversight by the board of directors or supervisory board;
2.    Oversight by individuals not involved in the day-to-day running of the various business areas;
3.    Direct line*supervision of different business areas; and
4.    Independent risk management and audit functions. In addition to these, it is important that the key personnel ate fit and proper for their lobs.
NEED FOR CORPORATE GOVERNANCE IN BANKS
1.    Banks in India are facing increasing competition, within and outside India, both in terms of markets for its products and for sources of fund. It has, therefore become necessary for banks to constantly reengineer, to provide the products and services to suit the ever changing requirements,
2.    To accelerate the speed with which the transactions are completed and to constantly evaluate and provide training to the workforce update the knowledge and impress upon them the necessity to have a professional and competitive approach
3.    Investors believe that a bank with good governance will provide them a safe place for investment and also give better returns. Good corporate Governance is, therefore, an important factor in a competitive environment.
4.    To attract and retain the commitment of investors, customers, employees, Banks should ensure that they match the global benchmarks in Corporate Governance practices
CORPORATE GOVERNANCE IN PUBLIC SECTOR BANKS
The issue of corporate governance in PSBs is important and also complex. 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, and 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. 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. Banks philosophy for corporate Governance should lay emphasis on the cardinal values of 'fairness, transparency and accountability', as enunciated by World Bank, for performance at all levels, thereby, enhancing the shareholders' value and protecting the interest of the stakeholders. The Banks consider themselves as trustee of its shareholders and should acknowledge its responsibility towards them for creation and safeguarding shareholders' wealth. Banks should continue its pursuit of achieving these objectives through the adoption and monitoring of corporate strategies, prudent business plans, monitoring of major risks of the banks business and pursuing the policies and procedures to satisfy its legal and ethical responsibilities. Hence, banks should aim at enhancing the long term shareholder value while protecting the 'interest of shareholders, customers and other in line with international best practices.

CORPORATE GOVERNANCE IN PRIVATE SECTOR BANKS
Private sector banks have entered niche areas, listed their scrip and being market driven they have been more transparent in their functioning.
They have also been more technically, growth oriented and have less of NPAs. Private sector banks has to conform with standard of good banking practices such as
1.    Ensuring a fair and transparent relationship between the customer and bank
2.    Instituting comprehensive risk management system and its adequate disclosure
3.    Proactively handling the customer complaints and evolving scheme of redressal for grievances.
4.    Building    systems    and    processes    to    ensure    compliance    with    the statutes concerning banking.

RECENT STEPS TAKEN BY BANKS IN INDIA FOR CORPORATE GOVERNANCE
•    Induction of non executive members on the Boards
•    Constitution of various Committees like Management Committee' Audit committee, Investor's Grievances committee, ALM Committee etc.
•    Gradual implementation of prudential norms as prescribed by RBI'
•    Introduction of Citizens Charter in Banks
•    Implementation of know Your Customer" concept' the primary responsibility for good governance lies with the Board of Directors and the senior management of the Bank
CONCLUSION
In competitive business environment, organizations that adopt good corporate governance and best practices will be able to survive and  attain sustainable growth levels. Public Sector Banks need greater functional autonomy in-a deregulated environment' Such autonomy' however' needs to be accompanied by greater accountability on the pan of their boards to the stakeholders. A Corporate Governance Policy shall serve as an effective instrument for achieving this goal. The success of corporate governance rests on the awareness on the part of the banks of their own responsibilities'
While law can control and regularize certain practices' the ultimate responsibility of being ethical and moral remains with the banks. It is this enlightment that would bring banks closure to their goals
The following aspects require special mention while judging the standard of corporate governance in a banking institution:
a)    Constitution of the Board of directors
b)    Transparency
c)    Policy formulation
d)    Internal controls
e)    Committees of the Board
Thus Liberalization, Privatization and Globalization together with Information Technology are currently changing the Indian banking radically. Earlier, banking was virtually a monopoly of the public sector banks with full protection from the State. But the process of reforms in the Indian banking system has thrown them out to more liberal and free market forces.
Now the banks, more particularly the public sector ones, feel the real heat of the competition. The interest rate cuts, dwindling margins and more number of players to serve a reduced number of bankable clients have all added to the worries of the banks. The customer has finally come to hold the center stage and all banking products are tailor-made to suit his tastes and preferences. This sudden change in the banking environment has bereaved the banks of all their comforts and many of them are finding it extremely difficult to cope with the change.