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A REPORT ON

IMPACT OF CORPORATE GOVERNANCE ON


BANKING SECTOR

A PROJECT REPORT SUBMITTED TO


DEPARTMENT OF BUSINESS AND INDUSTRIAL
MANAGEMENT

IN PARTIAL FULLFILLMENT OF THE REQUIREMENTS


FOR
THE DEGREE OF
MASTER OF BUSINESS ADMINISTRATION (MBA)

SUBMITTED BY:
SHRUTI S. LATHIYA

GUIDED BY:
DR. JANKI MISTRY

MBA PROGRAMME
DEPARTMENT OF BUSINESS AND INDUSTRIAL
MANAGEMENT
VEER NARMAD SOUTH GUJRAT UNIVERSITY
YEAR 2022-23
DECLARATION

I, SHRUTI LATHIYA, hereby declare that the project report entitled “IMPACT OF CORPORATE
GOVERNANCE ON BANKING SECTOR” under the guidance of DR.JANKI MISTRY, professor,
department of business and industrial management, VNSGU university is the result of the
original work done by me and the best of my knowledge, a similar work has not been
submitted earlier to my university or any other institution.

It is my work carried out during 4th semester (2022-23) and is not submitted to any
other Degree/Diploma to any other Institution/Organization by me or any other person.

Shruti S. Lathiya

Enrollment no.: R21100021010110046

Date: ___________________

Signature: ___________________

Department of Business and Industrial Management

Veer Narmad South Gujarat University Surat

I
CERTIFICATE

CERTIFICATE OF DEPARTMENT

DEPARTMENT OF BUSINESS AND INDUSTRIAL


MANAGEMENT

VEER NARMAD SOUTH GUJARAT UNIVERSITY

This is to certify that Shruti Lathiya has completed her project


report as a part of MBA curriculum. She has completed a study
on “Impact of Corporate Governance on Banking Sector”

Her work is found to be of the standard required of MBA


Curriculum

Dr.Janki Mistry Dr. Manish Sidhpuria


(Project Guide) (Head of Department)

II
ACKNOWLEDGEMENT

The successful completion of this work could not have been possible without the
constant support and encouragement of people around. Their contributions are
sincerely appreciated and gratefully acknowledged. I take this opportunity to express
my gratitude to all of them.

Firstly, I would like to thank Veer Narmad South Gujarat University and Department
of Business and Industrial Management for giving us this opportunity to execute the
skills learnt during Master of Business administration programme through this
project. The wholesome experience was enriching.

Secondly, I am thankful to my guide Dr. Janki Mistry for giving me opportunity to


work on this project and for constantly guiding and encouraging throughout the
project.

Further, I would offer my gratitude to thank Dr. Manish Sidhpuria, Head of


department of DBIM and to all those faculty members who have aided and pushed me
towards my success.

Lastly, I would acknowledge all the people who have directly or indirectly
contributed towards completion of my project work.

Yours sincerely

Shruti Lathiya

III
EXECUTIVE SUMMARY

The project title ‘Impact of corporate governance on banking sector’ is examined to find
out the impact of corporate governance on various private and public sector banks. This
study focused on 8 aspects of corporate governance namely: total number of directors,
non-executive directors, and women executive directors, total number of board
meetings, audit committee meetings, risk management committee meetings, C.S.R
committee meetings, and stakeholder relation committee meetings. Banking
performance has been measured through 3 aspects that is return on asset (ROA), return
on equity (ROE), earning per share (EPS).

My project report is divided into 6 chapters. The first one includes introduction of
overall banking sector such as meaning, types, functions, and current state of banking
sector.

The second chapter provides brief information about corporate governance such as
definitions, characteristics, importance, and framework of corporate governance in
India.

Moving ahead, third chapter includes literature review to give brief on various studies
happened in past with justification of title and objective of study.

The fourth chapter includes research methodology which states descriptive research
design is used, secondary data is used which is collected from financial statement of
various public and private sector banks.

The fifth chapter includes findings and analysis of the project. The method of analysis is
multiple regressions, which are shown with interpretation.

The last chapter includes the summation of the findings and conclusion for the further
research. And in the end, source of information is providing in references.

IV
TABLE OF CONTENT

PARICULARS PAGE NO.

DECLARATION I

CERTIFICATE II

ACKNOWLEDGEMENT III

EXECUTIVE SUMMARY IV

Chapter 1. Introduction of Industry 1

Chapter 2. Introduction of Corporate 12


Governance
Chapter 3. Review of Literature 20

Chapter 4. Research Methodology 24

Research design 26

Population 26

Data collection 26

Sampling frame 26

Limitation of work 26

Scope of future study 27

Chapter 5. Findings and Analysis 28

Chapter 6. Conclusion and Suggestions 70

Bibliography 73

V
TABLE OF CONTENT

Table Particular Page No.


N0.

5.1 STATE BANK OF INDIA 30

5.2 PANJAB NATIONAL BANK 32

5.3 BANK OF BARODA 34

5.4 UNION BANK OF INDIA 36

5.5 HDFC BANK 38

5.6 ICICI BANK 40

5.7 AXIS BANK 44

5.8 YES BANK 46

VI
CHAPTER 1
INTRODUCTION

1
What is bank?
A bank is a financial institution which performs the deposit and lending function. A
bank allows a person with excess money (Saver) to deposit his money in the bank and
earns an interest rate.

Similarly, the bank lends to a person who needs money (investor/borrower) at an


interest rate.

Thus, the banks act as an intermediary between the saver and the borrower.

The bank usually takes a deposit from the public at a much lower rate called deposit
rate and lends the money to the borrower at a higher interest rate called lending rate.

The difference between the deposit and lending rate is called ‘net interest spread’, and
the interest spread constitutes the banks income.

ESSENTIAL FUNCTIONS OF THE BANK

2
A. Primary functions of a bank
These include 2 major roles:

1. Acquiring deposits
This includes mustering public investment and providing security to the collected
funds. They also offer interests on the deposited amount which in turn encourages
people to invest in banks. There are many types of investment deposits:

Saving deposits

 Appropriate for those receiving remuneration and wages.


 These have a low fare of interest.
 Unlimited withdrawals can take place.
 The account can have any – a single holder or a joint holder.
 A minimum amount always needs to remain deposited in the bank account –
which is different for different banks.
 This promotes a culture of saving amongst the bank users.
 Withdrawal, additions, or transactions may be made through atm debit cards,
several types of cheque books, or internet banking
 Provisions.

Fixed deposits

 These are also known as ‘term deposits’.


 An amount is deposited for a predetermined fixed term.
 These have a high fare of interest, which also varies with the duration of the fixed
term for which the amount is deposited.
 Withdrawals are not permitted during this term.
 When withdrawal of deposits takes place before the term is over, there is a penalty
fine sanctioned which is to be submitted to the bank.

Current deposits

 Appropriate for business people and entrepreneurs.


 There is a provision of overdraft to those holding these accounts.
 Deposits act as loans for a short period of time in urgent situations.
 Bank imposes a high rate of interest added to which are charges of the overdraft
provision.
 This helps maintain a pool of assets which further act as a resource for overdrafts.

Recurring deposits

 Appropriate for people receiving remuneration and trivial traders.


 Deposits are made at consistent intervals.
 Withdrawal of deposits can take place only after a certain interval of time.
 These have a very high fare of interest due to the presence of compounded interest
rate.

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 This makes possible the collection of large amounts of assets deposited.

2. Provisions of loan, down payments and deposits


This includes the usage of deposited amounts as loan payments made to those
members who applied for it. The interest fair difference between that taken on the
loans and the one offered on the deposits is how the bank obtains profit. There are
many types of loans and advances:

Bank overdrafts

 This provision is for bank account holders.


 This permits the withdrawal of amounts more than that present in the account,
however only to a certain extent.
 There is a provision of the overdraft facility offered against a collateral asset.
 The interest paid depends on the duration term of the loan along with the amount.

Cash credits

 Appropriate for both – account holders and non-account holders in the bank.
 This is a provision for loans up to a certain extent for a short duration of time.
 The loan is passed against a collateral asset or property which acts as assurance.
 Interest is only on the extra amount withdrawn.
 This credit offers a larger loan when compared to an overdraft.

Loans

 Loans are lent to bank associates for a duration of about 1-5 years or a longer-
term against a collateral asset.
 The debtor can either repay the entire loan amount at once or pay it in small
installments over a fixed duration of time.
 Interest is charged on the sanctioned amount of loan which is comparatively less
to the fare decided for overdrafts and credit facilities.

Discounting the bill of exchange

 This provision is of loans for a short duration.


 The dealer discounts the final charge or bill from the bank in return for a
particular fee.
 The bank pays the amount by discounting or buying the bill.
 The bank cuts the discount charges while paying the bill on behalf of the buyer.
B. Secondary functions of a bank
These include 2 major roles:

1. Agency functions of bank


Banks are the representatives, negotiators, and hence the agents of their members.
Due to this, they have to perform several functions which include:

4
 Transfer of funds: this occurs from one bank branch to the other or during any
transactions.
 Periodic accumulation: gathering remunerations, wages, pensions, etc on behalf of
their associates.
 Periodic payments: payment of rent and various other bills and expenditures on
behalf of their client.
 Cheque collection: accumulation of deposits from exchange bills via the clearing
section of its members.
 Portfolio management: buying and selling of associate shares or debt instruments
and hence portfolio debiting or crediting.
 Other functions: these include basic roles such as trustee, administrator, advisors,
etc.

2. Utility functions of bank


These include the following:

 Managing project reports and details.


 Deciding and venturing into foreign exchanges by handling demat accounts.
 Issuing credit letters, cheques, etc.
 Organizing and participating in social welfare programs.
 Securing important documents, valuables, and assets any provision of lockers.
 Underwriting of shares and promise pay such as debentures.
 Providing guarantee on its visitor’s behalf.

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TYPES OF BANKS IN INDIA

There are several types of banks in India that are broadly divided into 2 categories i.e.
Scheduled Banks and Non – Scheduled Banks.

Scheduled Banks
1. Central Bank
 A chief bank that keeps a check on and synchronizes with all the other banks in a
particular country is known as the Central Bank of the country.
 In India, the post of the Central Bank is that of the ‘Reserve Bank of India’ (RBI).
 The RBI is also known as the ‘government’s bank’ or the ‘banker’s bank’.
 The RBI is responsible for regulating and guiding other banks in the country.
 It emanates the currency of the country i.e the Indian Rupee.
 It executes and carries out financial and monetary strategies, approaches, and
determining policies.
 The RBI overlooks the pecuniary system of the country by handling the finances.
 It is also responsible for foreign exchange.
 All of these functions always take place under the supervision of the government
of the country.
2. Cooperative Banks
 Such banks operate under the state government’s act.
 The main objective of these banks is to ensure the social well – being of the
public.
 This is done by offering loans that are open to concession based on user comfort.
 These have a 3 level format:
Level 1: The state-level cooperative banks include The RBI, government, and NABARD
finance. Public distribution of money takes place. Concessional CRR, SLR charges also apply
upon these banks. (CRR- 3%, SLR- 25%).
The ownership belongs to the state government and the various members choose the
major management.

6
Level 2: The district-level cooperative banks. These are set up to enhance
development in the agricultural sectors of majorly the rural areas. But they also run
non – agricultural cooperatives with other unions, etc. Each district has a district-level
bank in India.
These banks are together represented by a State Apex Central Co-operative bank for
each state. The members indulge in multiple different professions. These banks get
loans at an interest rate of 1% to 2% lower than the standard bank rate

Level 3: The rural or village level cooperative banks with their main focus on primary
agriculture. NABARD is responsible for keeping a check on these banks. Primary
Agricultural Credit Societies (pacs) exist on this level which works on grassroots
levels.
This help provides short and middle term loans to their members and acts as a link
between the higher financial institutions of the country and their members. As of
March 2018, there were 96248 such banks in the country.

Non – Scheduled Banks


3. Commercial Banks
 Such banks operate under the Banking Companies Act of 1956.
 These are often run by either the government or any private firm.
 The major aim of such banks is to earn maximum profit through their commercial
policies.
 The deposit amount by its users acts as a major resource of its reserve.
 Concessional interest fares are only offered when directed by the CBI.
 These are appropriate for operation in both urban and rural areas.

These further have 2 major types:

A. Public Sector Banks: The denominating shareholder is either the government or


the central bank of the country.

B. Private Sector Banks: The denominating shareholder is an individual, some


private organization, or a selected group of individuals.

4. Regional Rural Banks


 Operating under the Regional Rural Bank Act of 1976, these banks started in
1975.
 These banks aim at the development of rural and agricultural areas with the help
of concessional loan offerings.
 The establishment of 196 has taken place in between 1987 – 2005.
 The ownership of these banks belong 50% to the national government, 15% to the
state government, and 35% to the commercial bank.
 3 geographically consecutive districts cannot have the branches of the same
Regional Rural Bank.
 From 2005 onwards, the merging of these banks took place then by the
government due to which the number reduced to 86.

7
5. Local Area Banks
 Operating under the Companies Act, 1956 these banks originated in the year
1996.
 These are commercially driven banks with the aim of earning profit.
 These are run by private firms.
 Currently, in India, there are 4 Local Area Banks located in the southern part of
India.

6. Specialized Banks
 Banks which started for determined purposes are Specialized Banks.
 The ‘Export and Import’ (EXIM) Bank is a part of the specialized banks. Export
and import finances take place and loans occur via these banks.
 Commercial and monetary responsibilities regarding rural artworks, handicrafts,
villages, and agricultural development often take place by the ‘National Bank for
Agricultural & Rural Development’ (NABARD).
 The Small Industries Development Bank of India (SIDBI) offers loans for small
scale industries and also upgrades them in terms of technology and equipment.
 These are responsible for the economic and industrial development of the country.

7. Small Finance Banks


 Regulated and controlled by the national government of the country.
 Responsible for offering finances and loans to minor businesses and trades such
as farming or the poor unorganized sector.

8
IMPORTANCE OF BANKING SECTOR IN INDIA

Despite considerable expansion, banking penetration remains low in comparison to


global markets. In India, a major part of the population is financially excluded.
Merely, 40% of the adult population has a bank account 13% of the people have a
debit card and only two percent have credit cards 25,000 plus villages have a bank
branch out of the 600,000 villages in the country. This indicates the scope for
expansion for Indian banks.

The average population coverage by a commercial bank branch improved from


14,000 in 2010 to 13,466 in 2011 to 12,921 in 2012 while population per ATM from
19,700 in 2010 to 16243 in 2011. Banks are an important part of the financial sector
and play a vital role in promoting financial inclusion. Thus, a bank-led model of
financial inclusion has been embraced in the country.

As per the Reserve Bank of India (RBI), financial inclusion is the process of ensuring
access to appropriate financial products and services needed by all sections of the
society in general and vulnerable groups such as weaker sections and low-income
groups in particular, an affordable cost in a fair and transparent manner by regulated
mainstream institutional players.

The Reserve Bank and the Government of India have taken many steps for inclusive
growth and development encourages the Information Communication and Technology
(ICT) model helping banks to counter the barriers of geography and achieve financial
inclusion.
Business Correspondents (BCs)

In 2006, RBI permitted banks to use business facilitators and business correspondents
as intermediaries to provide financial and banking services. BCs act as retail agents
representing banks to offer banking services in places other than a bank branch/ATM.
The BC model is a low-cost alternative to the brick and mortar branches offering
limited baking services. The BC model offers doorstep delivery of services especially
‘cash in-cash out’ transactions in areas closer to the rural population.
In Sept 2010, banks were permitted to engage “for profit‟ companies as BCs over and
above the individuals/entities permitted earlier. As on Sep 30, 2012 banks have
opened 158,159 BC outlets providing banking services in 199,702 villages.

Setting up of Ultra Small Branches (USBs):

In order to support and mentor the Business Correspondent Agents (BCAs) banks are
making sure arrange of banking facilities are provided to residents of villages by
setting up Ultra Small Branches (USBs)in villages/rural centres covered through
BCAs under financial inclusion. A USB is a small area of 100-200sq ft where the
bank officer offers services with a lap-top on pre-decided days. While BCAs provide
cash services, the bank officer provides other services, undertakes field verification
and follows upon the banking transactions.

9
UIDAI for increasing financial inclusion:

The Unique Identification Authority of India (UIDAI) through its UID number and
Aadhaar enabled payment system (AEPS) permits online financial inclusion
transactions at PoS (Micro ATM using handheld device) with the BC making use of
the Aadhaar authentication. Aadhaar Enabled Payment Systems (AEPS) is a bank-led
model which is in alignment with UIDAI’s strategy to use the UID number to route
government benefit transfer payments to beneficiaries. Aadhaar Payment Bridge
System (APBS), a centralised electronic benefit transfer system will help enable direct
disbursement of government benefits to the beneficiary’s bank account which is
aligned to Aadhaar number and biometric authentication resulting in effective and
safe disbursement of benefits to beneficiaries and help the Government decrease the
administrative costs of the various schemes as well as the leakages in the transfers.

Mobile Banking:

There is growing use and penetration of mobile phones in India. As per the Telecom
Regulatory Authority of India (TRAI), the mobile subscriber base in India as on Oct
2012 stood at 904.23 Mn includes 566.81mn urban subscribers accounting for 62.68%
share and 337.42 Mn rural subscribers accounting for 37.32% share.
In Oct 2012, 4.44 Mn transactions totaling to Rs 4.97 bn were processed against
2.25mn transactions totaling to Rs 1.61 bn processed in Oct 2011 -a growth of197%
in volume and 308%in value terms. There still further exists huge scope for mobile
banking. As on June 2012, 69 banks have been granted approval to offer mobile
banking facilities, of which 49 have commenced operations.

CURRENT STATE OF BANKING SECTOR IN INDIA

 The Indian banking system consists of 12 public sector banks, 22 private


sector banks, 44 foreign banks, 56 regional rural banks, 1,485 urban
cooperative banks and 96,000 rural cooperative banks in addition to
cooperative credit institutions. As of August 2020, total number of atms in
India increased to 209,110 and is expected to reach 407,000 by 2021.

 According to Reserve Bank of India (RBI), India’s foreign exchange reserve


reached US$ 560.53 billion as on October 23, 2020. According to the Reserve
Bank of India (RBI), bank credit and deposits stood at Rs. 103.43 lakh crore
(US$ 1.39 trillion) and Rs. 143.02 lakh crore (US$ 1.92 trillion), respectively,
in the fortnight ending October 9, 2020.

 Credit to non-food industries stood at Rs. 102.80 lakh crore (US$ 1.38 trillion)
as of October 9, 2020.

 Asset of public sector banks stood at Rs. 107.83 lakh crore (US$ 1.52 trillion)
in FY20.

 Total assets across the banking sector (including public, private sector and
foreign banks) increased to US$ 2.52 trillion in FY20. Indian banks are
increasingly focusing on adopting integrated approach to risk management.

10
 As per Union Budget 2019-20, investment-driven growth required access to
low cost capital, and this would require investment of Rs. 20 lakh crore (US$
286.16 billion) every year.
 RBI has decided to set up Public Credit Registry (PCR), an extensive database
of credit information, accessible to all stakeholders. The Insolvency and
Bankruptcy Code (Amendment) Ordinance, 2017 Bill has been passed and is
expected to strengthen the banking sector. Total equity funding of
microfinance sector grew 42% to Rs. 14,206 crores (US$ 2.03 billion) in
2018-19.
 Bank accounts opened under the Government’s flagship financial inclusion
drive Pradhan Mantri Jan Dhan Yojana (PMJDY) reached 40.05 crore and
deposits in Jan Dhan bank accounts stood at more than Rs. 1.30 lakh crore
(US$ 18.44 billion).
 Rising income is expected to enhance the need for banking services in rural
areas, and therefore, drive the growth of the sector.
 The digital payments revolution will trigger massive changes in the way credit
is disbursed in India. Debit cards have radically replaced credit cards as the
preferred payment mode in India after demonetization. Payments on Unified
Payments Interface (UPI) hit an all-time high of 1.49 billion in terms of
volume with transactions worth nearly Rs. 2.90 lakh crore (US$ 41.22 billion)
in July 2020.

 The banking system is profitable, growing and adequately capitalized. The net
profits of the sector have performed a somersault of sorts—from a loss of Rs
23,397 crore in 2018-19 to a record Rs 1.82 lakh crore of profit in 2021-22.

11
CHAPTER 2

INTRODUCTION TO CORPORATE
GOVERNANCE

12
MEANING:

Corporate governance is the system by which companies are directed and controlled.
Boards of directors are responsible for the governance of their companies. The
shareholders’ role in governance is to appoint the directors and the auditors and to
satisfy themselves that an appropriate governance structure is in place.
The responsibilities of the board include setting the company’s strategic aims,
providing the leadership to put them into effect, supervising the management of the
business and reporting to shareholders on their stewardship.
Corporate governance is therefore about what the board of a company does and how it
sets the values of the company, and it is to be distinguished from the day to day
operational management of the company by full-time executives.

CORPORATE GOVERNANCE: LEGAL DEFINITIONS

Generally, corporate governance refers to the host of legal and non-legal principles
and practices affecting control of publicly held business corporations. Most broadly,
corporate governance affects not only who controls publicly traded corporations and
for what purpose but also the allocation of risks and returns from the firm’s activities
among the various participants in the firm, including stockholders and managers as
well as creditors, employees, customers, and even communities. However, American
corporate governance doctrine primarily describes the control rights and related
responsibilities of three principal groups:

• The firm’s shareholders, who provide capital and must approve major firm
transactions,
• The firm’s board of directors, who are elected by shareholders to oversee the
management of the corporation, and
• The firm’s senior executives who are responsible for the day to day operations of the
corporation.

As the Delaware Supreme Court has stated, “the most fundamental principles of
corporate governance are a function of the allocation of power within a corporation
between its stockholders and its board of directors.”

In broad terms, corporate governance refers to the way in which a corporation is


directed, administered, and controlled. Corporate governance also concerns the
relationships among the various internal and external stakeholders involved as well as
the governance processes designed to help a corporation achieve its goals. Of prime
importance are those mechanisms and controls that are designed to reduce or
eliminate the principal-agent problem.

13
DEFINITION:

“Corporate governance is the acceptance by management of the inalienable rights of


the shareholders as the true owners of the corporation and of their own role as trustees
on behalf of the shareholders. It is about commitment to values, about ethical business
conduct and about making a distinction between personal and corporate funds in the
management of the company.”
- BY N.R. NARAYANA MURTHY, COMMITTEE ON
CORPORATE GOVERNANCE (SEBI)

CHARACTERISTICS OF GOOD CORPORATE GOVERNANCE

1. Clear Organizational Strategy:


Good corporate governance starts with a clear strategy for the organization. For
example, a furniture company’s management team might research the market to
identify a profitable niche, create a product line to meet the needs of that target market
and then advertise its wares with a marketing campaign that reaches those consumers
directly. At each stage, knowing the overall strategy helps the company’s workforce
stay focused on the organizational mission: meeting the needs of the consumers in
that target market.

2. Effective Risk Management:

Even if your company implements smart policies, competitors might steal your
customers, unexpected disasters might cripple your operations and economy
fluctuations might erode the buying capabilities of your target market. You can’t
avoid risk, so it’s vital to implement effective strategic risk management. For
example, a company’s management might decide to diversify operations so the
business can count on revenue from several different markets, rather than depend on
just one.

3. Discipline and Commitment:

Corporate policies are only as effective as their implementation. A company’s


management can spend years developing a strategy to push into new markets, but if it
can’t mobilize its workforce to implement the strategy, the initiative will fail. Good
corporate governance requires having the discipline and commitment to implement
policies, resolutions and strategies.

4. Fairness to Employees and Customers:

Fairness must always be a high priority for management. For example, managers must
push their employees to be their best, but they should also recognize that a heavy
workload can have negative long-term effects, such as low morale and high turnover.
Companies also must be fair to their customers, both for ethical and public-relations
reasons. Treating customers unfairly, whatever the short-term benefits, always hurts a
company’s long-term prospects.

14
5. Transparency and Information Sharing:

Managers sometimes keep their own counsel, limiting the information that filters
down to employees. But corporate transparency helps unify an organization: When
employees understand management’s strategies and are allowed to monitor the
company’s financial performance, they understand their roles within the company.
Transparency is also important to the public, who tend not to trust secretive
corporations.

6. Corporate Social Responsibility:

Social responsibility at the corporate level is increasingly a topic of concern.


Consumers expect companies to be good community members, for example, by
initiating recycling efforts and reducing waste and pollution. Good corporate
governance identifies ways to improve company practices and also promotes social
good by reinvesting in the local community.

7. Regular Self-Evaluation:

Mistakes will be made, no matter how well you manage your company. The key is to
perform regular self-evaluations to identify and mitigate brewing problems. Employee
and customer surveys, for example, can supply vital feedback about the effectiveness
of your current policies. Hiring outside consultants to analyse your operations also
can help identify ways to improve your company’s efficiency and performance.

IMPORTANCE OF CORPORATE GOVERNANCE:

It shapes growth and future of capital markets of the economy.


It helps in raising adequate funds from capital markets.
It links company’s management system with its financial reporting system.
It enables management to take innovative decisions for effective functioning of an
enterprise within the legal framework of accountability.
It supports investors by making corporate accounting practices transparent. Corporate
enterprises have to disclose financial reporting structures.
It provides adequate and timely disclosure, reporting requirements, code of conduct
etc. Companies present material price sensitive information to outsiders and ensure
that till the time this information is made public, insiders abstain from dealing in
corporate securities. It, thus, avoids insider trading.
It improves efficiency and effectiveness of an enterprise and adds to material wealth
of the economy.

It improves international image of the corporate sector and enables home companies
to raise global capital.

15
REGULATORY FRAMEWORK OF CORPORATE GOVERNANCE IN
INDIA

Regulatory Framework for Corporate Governance in India as a part of the process of


economic liberalization in India, and the move toward further development of India’s
capital markets, the Central Government established regulatory control over the stock
markets through the formation of the SEBI. Originally established as an advisory
body in 1988, SEBI was granted the authority to regulate the securities market under
the Securities and Exchange Board of India Act of 1992 (SEBI Act).

Public listed companies in India are governed by a multiple regulatory structure. The
Companies Act is administered by the Ministry of Corporate Affairs (MCA) and is
currently enforced by the Company Law Board (CLB). That is, the MCA, SEBI, and
the stock exchanges share jurisdiction over listed companies, with the MCA being the
primary government body charged with administering the Companies Act of 1956,
while SEBI has served as the securities market regulator since 1992.
SEBI’s authority for carrying out its regulatory responsibilities has not always been
clear and when Indian financial markets experienced massive share price rigging
frauds in the early
1990s, it was found that SEBI did not have sufficient statutory power to carry out a
full investigation of the frauds. Accordingly, the SEBI Act was amended in order to
grant it sufficient powers with respect to inspection, investigation, and enforcement,
in line with the powers granted to the SEC in the United States.

A contentious aspect of SEBI’s power concerns its authority to make rules and
regulations. Unlike in the United States, where the SEC can point to the Sarbanes-
Oxley Act, which specifically confers upon it the authority to prescribe rules to
implement governance legislation, SEBI, on the other hand, cannot point to a similar
piece of legislation to support the imposition of the same requirements on Indian
companies through Clause 49. Instead, SEBI can look to the basics of its own
purpose, as given in the SEBI Act, wherein it is granted the authority to “specify, by
regulations, the matters relating to issue of capital, transfer of securities and other
matters incidental there to and the manner in which such matters shall be disclosed by
the companies.” In addition, SEBI is granted the broad authority to “specify the
requirements for listing and transfer of securities and other matters incidental thereto.”

Recognizing that a problem arising from an overlap of jurisdictions between the SEBI
and MCA does exist, the Standing Committee, in its final report, has recommended
that while providing for minimum benchmarks, the Companies Bill should allow
sectoral regulators like SEBI to exercise their designated jurisdiction through a more
detailed regulatory regime, to be decided by them according to circumstances.

Further the Committee suggested that if both are silent, requisite provisions can be
included in the Special Act itself and that the status quo in this regard may, therefore,
be maintained and the same may be suitably clarified in the Bill. This, in the
Committee’s view, would ensure that there is no jurisdictional overlap or conflict in
the governing statute or rules framed there under.

16
CORPORATE GOVERNANCE IN BANKING SECTOR
1) GENERAL FEATURES:
• Indian Legal system provides a very high level of protection to Indian Investors and
India has a very high ranking with a score of 5 in shareholders rights index and a
maximum score of 4 in creditors rights index.
• But these scores only remain on paper as the effectiveness of implementation lacks
due to huge corruption and a variety of other reasons.
• Institutions like SEBI, NSDL, NSCL have improved investors rights on many
fronts.
• Annual reports now feature a certificate from the CEO and the CEO in which they
affirm that financial statements do not contain any misleading statements.
• The corporate governance landscape in India has seen positive developments in the
last decade, particularly with the enactment of clause 49 of the listing agreement and
the legal changes in enforcing creditors rights.

2) CORPORATE GOVERNANCE IN BANKING SECTOR – PRIVATE


SECTOR:

There are 3 types of stakeholders in a company: Promoters, Financial Institutions and


Individual or retail Investors. Initially, all the three categories were equally important
but now at the expense of retails investors other two have gained more stake.
• Promoters in India, in general, take a longer view and provide a more solid
foundation for developing the companies.

• In electing the directors, the majority rule voting system is typically followed.

• Company Boards generally comprise of three types of directors: Promoter Directors


(or functional directors in the case of professionally managed companies),
Professional Directors, and Institutionally Nominated Directors.

• Promoter Directors belong to the promoter group.

• Professional Directors are persons of eminence who are invited by the promoters
mainly on the basis of favorable personal equations.

• Institutionally Nominated Directors are either senior executives of the institutions or


persons of repute.

• The corporate governance system in the private sector may, therefore, be


characterized as the “entrenched system”, given the firm hold of the promoters over
the companies managed by them.

17
3) CORPORATE GOVERNANCE IN BANKING SECTOR – PUBLIC
SECTOR:
A board appointed by the ministry has 3 categories of Directors:

• Functional Director – full-time employees of the organization


• Government Directors – Bureaucrats from the Ministry
• Outside directors

Public Sector Enterprises (PSEs) are constrained by various regulations and


administrative guidelines. Further, they are subject to the CAG audit and are
accountable to parliament.

This leads to an excessive emphasis on observing rules, regulations, and guidelines.


Efficiency and performance are often sacrificed at the altar of propriety.

Chief Executives have short tenures below five years and development of
conditions or long-term outlook are not possible because of this.

4) LEGAL PROVISIONS:

• Strength: A public limited company must have at least three directors.


• Meetings: The board of directors must meet at least once in a quarter.
• Composition: There is no fixed number of non-executive directors. No person can
be a director of more than twenty companies.
• Powers: The board of directors has the powers to (a) borrow, lend, and invest funds,
(b) recommend dividends, and (c) appoint the managing director.
• Remuneration: The total remuneration of the directors is subject to a ceiling of 11
per cent of net profits. In addition, board members can be paid a sitting fee of up to
Rs.20000 per meeting.
• Duties: The board has the duty to present the annual report to the members.
• Liabilities: The board is punishable for breach of trust, dishonesty, and fraud.

5) CLAUSE 49 OF THE LISTING AGREEMENT:

Clause 49 of the Listing Agreement was introduced on the recommendations of the


Kumara Mangalam Birla committee set up by SEBI spells out the corporate
governance provisions applicable to listed companies.

Where the chairman of the board is a non-executive director, at least one-third of


the board should comprise of independent directors. In case the chairman is an
executive director, at least half of the board should comprise of independent directors.

A qualified and independent audit committee shall be set up. The audit committee
shall have a minimum of three directors as members. Two-thirds of the members of
18
the audit committee shall be independent directors. The chairman of the audit
committee shall be an independent director.
Where the company deviates from a prescribed Accounting Standard, the same
shall be disclosed in the financial statements, together with the management’s
explanation for the same.
The CEO and CFO shall certify to the Board that the financial statements present a
true and fair view of the company’s affairs; that to the best of their knowledge and
belief no transactions entered by the company are fraudulent.
6) REQUIRED REFORMS IN CORPORATE GOVERNANCE:

One of the reforms required in Corporate Governance rules are listed below:

• Strengthen the Hands of Institutional Investors


• Separate Management from Control
• Expand the Role of Non-executive Directors
• Limit the Size of the Board
• Ensure that the Board is informational well-equipped
• Link Managerial Compensation to Performance
• Enhance Contestability
• Improve Corporate Accounting and Reporting Practices

19
CHAPTER 3
REVIEW OF LITERATURE

20
LITERATURE REVIEW

CHEUNG ET AL. (2007) developed a Corporate Governance Index (CGI) based on


publicly available information to appreciate corporate governance and found
correlation between CGI and market to book value (firm value). The starting point for
the test was the OECD 2004 revised corporate governance principles. Larcker found a
positive correlation between the CGI used and financial performance measured by
sales growth, net profit margin and ROA, for a period of two years.

Impact of corporate governance on banking sector performance in Nigeria,


FATIMOH MOHAMMED (2011),

The research study considered the impact of corporate governance on the


performance of banks in Nigeria. The increased incidence of bank failure in the recent
period generated the current debate on transparency and disclosure of financial
information to the various users, as a means of appraising good governance in banks.
This study made use of both primary and secondary data in ensuring that data
obtained are sufficient for a reasonable conclusion. The secondary data obtained from
the annual financial statement of the banks for a period of five accounting year was
used in analyzing the financial ratios for the study. The primary data was analyzed
through the chi-square analysis method. The study concludes that corporate
governance significantly contributes to positive performance in the banking sector. It
therefore recommends that corporate governance codes should be adapted to meet the
need of Nigerian business environment.

Does Corporate Governance Influence Banking Performance? By RAMIZ UR


REHMAN, INAYAT ULLAH MANGLA (2012),

This paper investigates the impact of corporate governance variables on the financial
performance of the banking sector in Pakistan. The data of financial performance and
corporate governance variables of thirty banks are used for the period of 2001-2009.
The panel regression analysis is applied to determine the impact, firstly for the whole
banking sector, and secondly for different types of banks. The results show that there
is a significant impact of corporate governance variables on the performance of the
overall banking sector in Pakistan. But there is no significant impact of corporate
governance practices on the performance of foreign banks.

Corporate Governance and Bank Performance in the Romanian Banking Sector.


By, GHEORGHE CHITAN (2012).

The present study examines how, in the period 2004-2011, the regulatory framework
for minimum capital requirements, the loan classification and provisioning for
specific credit risk, the liquidity and the insurance of deposits and specific indicators
of banking influenced the bank's performance and the degree of banking development.
Mainly, the results indicate that the influence on bank performance is different from
that on bank development and the need for more stringent requirements in terms of
equity and the establishment of provisions related to the debtor’s probability of
default in order to limit the risk and to improve financial performance.

21
Corporate Governance and Banking Performance: A Comparative Study
between Private and State Banking Sector in Sri Lanka. By AJANTHAN, A., S.
BALAPUTHIRAN, AND B. NIMALATHASHAN (2013),
This study focused on four aspects of corporate governance namely; Board Size (BS),
Board Diversity (BD), Outside Directors Percentage (OSDP) & Board Meeting
Frequency (BMF). Banking performance has been measured through Return on
Equity (ROE) and Return on Assets (ROA). The results revealed that all variables of
corporate governance are positively correlated with ROE in state banks as well as, in
private banks except BD and BMF other variables have strong negative relation with
ROE, which is significant at 5percent level of significance. Similarly, except BMF
other variables have negative relationship with ROA in state banks. Private Banks
also show same relation except the variable BD. BD have strong negative relationship
with ROA in state banks which is significant at 5 percent level of significance, but in
private banks; positive relationship is denoted by BD which is not significant. Further
corporate governance has a moderate impact on performance of both private and state
banks.

Impact of Corporate Governance on Performance of Banking Sector in


Malaysia. By MAHBOUBEH BAHREINI (2013).

The purpose of this paper WAS to examine the impact of corporate governance
characteristics specially board of directors and audit committee on performance of
Malaysian banking sector. In this study sample includes one set of original data,
financial information was obtained from the annual reports of thirty banks in Malaysia
in period of 2005-2009, and data analyzed by panel data model. Based on the finding
in this research, it’s appeared that three out of six corporate governance characteristics
variables were discussed in this study such as board size, audit committee size, and
audit committee meeting have positive relationship with performance of bank.
Percentage of independent non-executive board of director and percentage of
independent non-executive audit committee members have negative correlation with
performance of bank. The result show that corporate governance mechanisms do
influence the bank performance, by referring to this result, we hope that banks try to
implement the right corporate governance system and policies until they can reduce
probability of failure and bankruptcy and can also increase reliability for investors and
investments.

The Impact of Corporate Governance on the Performance of Lebanese Banks.


By, HANI EL-CHAARANI (2014).

This study examined the impact of corporate governance on financial performance of


Lebanese banks during five years (from 2006 to 2010). The first finding reveals a
positive impact of independent boards on the performance of Lebanese banks..
Finally, the paper reveals a positive impact of insider ownership concentration on the
return of Lebanese banks indicating the more shares held by insiders, the better the
performance. The weaknesses of corporate governance in some Lebanese banks might
be compensated by higher insider ownership concentration.

22
The Impact of Corporate Governance on the Performance of Jordanian Banks.
By, IAAD ISSA SARTAWI (2014).

This paper investigates empirically the impact of corporate governance dimensions


(Board Size, Board Composition, Chief Executive Officer (CEO) Status, and Foreign
Ownership) on the performance of Jordanian Banks. The study reveals a positive
relationship between corporate governance dimensions: the number of outside board
members and foreign ownership and Jordanian banks’ performance. Whereas, board
size and the separation of the role of CEO and chairman have a negative relationship
with performance. In addition, the study reveals that banks benefit from large size in
offering services more than granting loans

Impact of Corporate Governance on the Performance of Commercial Banks in


Zimbabwe. By, HLANGANIPAI NGIRANDE (2014).

The paper presents the findings of the study that was conducted to investigate the
impact of corporate governance on the performance of commercial banks in
Zimbabwe. Using data gathered from 2009-2012, for a sample of five commercial
banks, it applies multi-regression model, to assess the causal relationship between
corporate governance measures (board size, board composition, internal board
committees and board diversity) and bank performance. The results indicate
unidirectional causal relationship from corporate governance to bank performance. In
addition, there a positive relationship between board composition, board diversity and
commercial bank performance, although a negative relationship appears between
board size, board committees and bank performance.

Impact of Corporate Governance on Firm Financial Performance in Islamic


Financial Institution. By HAIDER, N., KHAN, N. & IQBAL, N. (2015),
The paper discussed the influence and relationship between corporate governance
practices and firm financial performance in Islamic banking sector. Main purpose of
this study was to find or identify various factors or variables that affects the firm
financial performance. Corporate governance focuses on three meters as board size,
number of meeting and audit committee size and firm financial performance has also
three indicators return on equity, return on asset and earnings per share. Data reveals
the positive relationship between corporate governance and financial performance of
Islamic banking sectors. The most outstanding results of this study has considerable
and strong positive relationship in large board size and firm financial performance in
developing countries as Pakistani circumstances.

23
OBJECTIVES:
1. To identify the dimensions that represents the corporate governance and banking
performance.
2. To determine whether corporate governance has an impact on banks performance
in the Indian banking sector.
3. To identify the relationship between corporate governance and banking
performance in private and public sector banks.

24
CHAPTER 4
RESEARCH METHODOLOGY

25
A. RESEARCH DESIGN:

The research design is descriptive research design. To test the relationship between
the variables and regression will be used to evaluate and establish a relationship
between dependent and independent variables.

B. POPULATION:

Public banks and private banks of India are been considered for the research.

C. DATA COLLECTION:

Secondary data is being used in this research. The data regarding corporate
governance has been collected using annual report of various banks. The method of
analysis is Pearson correlation and multiple regression to check the significance and
dependency of corporate governance on the performance of bank.

D. SAMPLING FRAME:

The sampling frame of this research is from 2018 to 2022.

E. SAMPLING TECHNIQUE:

Judgmental and purposive sampling:

The banks were selected on the basis of public and private banking sector where the
purpose is to study the impact of corporate governance on banking sector. Thus,
judgmental sampling is non-probability sampling technique where the researcher
selects units to be sampled on his knowledge and professional judgment.

LIMITATION OF WORK:

This report suffers from some limitations, which should be addressed by the future
researchers.

• Limited sample size.


• Short frame of research.
• Market based measures such as share price; stock returns, market value of firm, etc
have been ignored.

Corporate governance is a vast concept and is difficult to measure with objectivity


and hence measure used in this study may be subjective and not a comprehensive
measure.

26
SCOPE OF FUTURE STUDY:
This study is based on simple model of corporate governance that has taken into
account only 8 aspects namely: total number of directors, non-executive directors,
women executive directors, total number of board meetings, audit committee
meetings, risk management committee meetings, C.S.R committee meetings,
stakeholder relation committee meetings. There are many other factors which may
have influence on the performance of banks.
A further study may be carried out by including more factors in the model and by
expanding its scope to other industry rather than only banking industry. Further,
banking performance has been measured through return on asset (ROA), return on
equity (ROE), earnings per share (EPS). Other key performance indicators may also
be including in the model for more authentic measurement of banking all round
performance.

27
CHAPTER 5
DATA ANLYSIS AND INTERPRETATION

28
PUBLIC SECTOR BANKS:

1. STATE BANK OF INDIA:

Founded in 1806, Bank of Calcutta was the first bank established in India and over a
period of time evolved into State Bank of India (SBI). SBI represents a sterling legacy
of over 200 years. It is the oldest commercial bank in the Indian subcontinent.

The Bank’s Philosophy on Code of Governance:

State Bank of India is committed to the best practices in the area of Corporate
Governance, in letter and in spirit. The Bank believes that good Corporate
Governance is much more than complying with legal and regulatory requirements.
Good governance facilitates effective management and control of business, enables
the Bank to maintain a high level of business ethics and to optimize the value for all
its stakeholders. The objectives can be summarized as:

• To protect and enhance shareholder value.


• To protect the interest of all other stakeholders such as customers, employees and
society at large.
❖The Bank is committed to:
• Providing free access to the Board to all relevant information, advices and resources
as are necessary to enable it to carry out its role effectively.
• Ensuring that the Chairman has the responsibility for all aspects of executive
management and is accountable to the Board for the ultimate performance of the Bank
and implementation of the policies laid down by the Board.
• The role of the Chairman and the Board of Directors are also guided by the SBI Act,
1955 with all relevant amendments.

29
5.1 STATE BANK OF INDIA

Particulars 2017-18 2018-19 2019-20 2020-21 2021-22

Total no. of Directors 13 14 14 14 13

Non Executive Directors 7 9 9 8 8

Women Executive Directors 1 2 1 2 1

Total no. of Board Meetings 9 15 16 13 13

Audit Committee Meetings 7 11 13 11 12

Risk Management Meetings 4 6 7 6 7

C.S.R Committee Meetings 4 4 3 5 5

Stakeholder relationship 4 4 3 4 4
committee meetings

ROA -0.18 0.02 0.36 0.48 0.68

ROE -3.37 0.39 6.95 8.86 12.33

EPS -7.67 0.97 16.23 22.87 35.49

30
2. PUNJAB NATIONAL BANK:

Punjab National Bank is an Indian multinational banking and financial services


company. It is a state-owned corporation based in New Delhi.Punjab National Bank
(PNB), India’s first Swadeshi Bank, commenced its operations on April 12, 1895
from Lahore, with an authorized capital of Rs. 2 Lakh and working capital of Rs.
20,000. The Bank was established by the spirit of nationalism and was the first bank
purely managed by Indians with Indian Capital. During the long history of the Bank, 9
banks have been merged/ amalgamated with PNB.

The Bank’s Philosophy on Code of Governance:

PNB’s Corporate Governance philosophy stems from the belief that corporate
governance is an integral element for improving efficiency and growth of the
organization with overall objective of enhancing investor and other stakeholder’s
confidence. As a Bank PNB is committed to good corporate practices based on
conscience, openness, fairness, professionalism and accountability. PNB’s Board of
Directors, guided by the mission statement, and formulates strategies and policies
focusing on value optimization for all stakeholders like customers, shareholders and
the society at large.

31
5.2 PUNJAB NATIONAL BANK

Particulars 2017-18 2018-19 2019-20 2020-21 2021-22

Total no. of Directors 10 10 10 10 13

Non Executive Directors 4 6 4 5 6

Women Executive Directors 0 1 1 1 1

Total no. of Board Meetings 11 11 9 10 11

Audit Committee Meetings 5 6 5 5 4

Risk Management Meetings 5 8 7 6 5

C.S.R Committee Meetings 4 4 5 5 4

Stakeholder relationship 6 3 3 4 3
committee meetings

ROA -1.6 0.18 -0.59 0.16 0.26

ROE -32.85 3.47 -11.2 2.41 3.9

EPS -55.39 6.45 -20.82 2.08 3.16

32
3. BANK OF BARODA:

Bank of Baroda is an Indian state-owned banking and financial services company


headquartered in Vadodara (earlier known as Baroda) in Gujarat, India. It is the
second largest bank in India, next to State Bank of India.

The Bank has 6 wholly owned domestic subsidiaries namely BOB Financial Solutions
Limited (erstwhile BOB Cards Ltd.), BOB Capital Markets Ltd, Baroda Asset
Management India Limited, Baroda Trustee India Private Limited, BarodaSun
Technologies Ltd and Baroda Global Shared Services Limited. Bank of Baroda also
has joint ventures with India First Life Insurance Company Limited for life insurance
and India Infradebt Limited engaged in infrastructure financing. The Bank owns
98.57% in The Nainital Bank. The Bank has also sponsored three Regional Rural
Banks namely Baroda Uttar Pradesh Gramin Bank, Baroda Rajasthan Gramin Bank
and Baroda Gujarat Gramin Bank.

The Bank’s Philosophy on Code of Governance:

The Bank shall continue its Endeavour to enhance its shareholders‟ value by
protecting their interest by ensuring performance at all levels and maximizing returns
with optimal use of resources in pursuit of excellence. The Bank shall comply with
not only the statutory requirements but also voluntarily formulate and adhere to a set
of strong Corporate Governance practices. The Bank believes in setting high
standards of ethical values, transparency and disciplined approach to achieve
excellence in all its sphere of activities. The Bank is also committed to follow the best
international practices. The Bank shall strive hard to serve the interests of its
stakeholders comprising shareholders, customers, Government, employees, creditors
and society at large.

33
5.3 BANK OF BARODA
Particulars 2017-18 2018-19 2019-20 2020-21 2021-22

Total no. of Directors 13 12 11 10 12

Non Executive Directors 8 9 7 6 7

Women Executive Directors 3 2 1 1 2

Total no. of Board Meetings 13 17 17 15 13

Audit Committee Meetings 15 13 17 14 15

Risk Management Meetings 5 6 8 6 7

C.S.R Committee Meetings 5 4 4 4 5

Stakeholder relationship 4 4 3 3 4
committee meetings

ROA -0.33 0.19 -0.8 0.07 0.56

ROE -5.6 3.43 -13.42 1.07 8.46

EPS -10.53 6 -23.89 1.78 14.06

34
4. UNION BANK OF INDIA:

Union Bank of India is one of the leading public sector banks of the country. The
Bank is a listed entity and the Government of India holds 89.07 percent in Bank’s
total share capital. The Bank, having its headquarters at Mumbai (India), was
registered on November 11, 1919 as a limited company.

Union Bank of India is the first large public sector bank in the country to have
implemented 100% core banking solution. The Bank has received several awards and
recognition for its prowess in technology, digital banking, financial inclusion, MSME
and development of human resources.

The Bank’s Philosophy on Code of Governance:

Union Bank of India has a tradition of good corporate governance practices. The Bank
has laid emphasis on the cardinal values of fairness, transparency andaccountability
for performance at all levels. Thus, enhancing the shareholders’ value and protecting
the interest of the stakeholders.
The Bank considers itself as trustee of its shareholders and acknowledges its
responsibility towards them for creation and safeguarding shareholder’s wealth.
During the year under review, the Bank continued its pursuit of achieving these
objectives through adoption and monitoring of corporate strategies, prudent business
plans, monitoring of major risks of the Bank’s business and pursuing policies and
procedures to satisfy its legal and ethical responsibilities.

35
5.4 UNION BANK OF INDIA
Particulars 2017-18 2018-19 2019-20 2020-21 2021-22

Total no. of Directors 13 13 14 10 12

Non Executive Directors 8 9 9 8 9

Women Executive 1 1 1 1 1
Directors

Total no. of Board 15 16 12 13 22


Meetings

Audit Committee Meetings 12 12 13 11 10

Risk Management 5 5 5 6 4
Meetings

C.S.R Committee 4 4 6 5 4
Meetings

Stakeholder relationship 4 6 4 4 3
committee meetings

ROA -1.07 0.12 0.33 0.27 0.44

ROE -20.9 2.36 6.65 4.87 7.94

EPS -69.45 8.08 20.42 4.54 7.73

36
PRIVATE SECTOR BANK:

1. HDFC BANK:

HDFC Bank is one of India’s leading private banks and was among the first to receive
approval from the Reserve Bank of India (RBI) to set up a private sector bank in
1994.

HDFC Bank was incorporated in August 1994 in the name of HDFC Bank Limited,
with its registered office in Mumbai, India. The bank commenced operations as a
Scheduled Commercial Bank in January 1995.

The Bank’s Philosophy on Code of Governance:

The Bank believes in adopting and adhering to the best recognized corporate
governance practices and continuously benchmarking itself against each such
practice. The Bank understands and respects its fiduciary role and responsibility
towards its shareholders and strives hard to meet their expectations. The Bank
believes that best board practices, transparent disclosures and shareholder
empowerment are necessary for creating shareholder value.

The Bank has infused the philosophy of corporate governance into all its activities.
The philosophy on corporate governance is an important tool for shareholder
protection and maximization of their long-term values. The cardinal principles such as
independence, accountability, responsibility, transparency, fair and timely disclosures,
credibility, sustainability etc. serve as the means for implementing the philosophy of
corporate governance in letter and spirit.

37
5.5 HDFC BANK
Particulars 2017-18 2018-19 2019-20 2020-21 2021-22

Total no. of Directors 12 10 10 11 12

Non Executive Directors 8 8 7 8 7

Women Executive 1 1 1 1 3
Directors

Total no. of Board 7 9 7 8 7


Meetings

Audit Committee 4 7 6 7 6
Meetings

Risk Management 4 5 2 5 3
Meetings

C.S.R Committee 2 4 3 3 4
Meetings

Stakeholder relationship 1 4 4 3 3
committee meetings

ROA 1.69 1.64 1.68 1.78 1.78

ROE 14.12 16.45 16.26 15.27 15.39

EPS 78.65 67.76 57.18 56.58 66.8

38
2. ICICI BANK:

ICICI Bank was established by the Industrial Credit and Investment Corporation of
India (ICICI), an Indian financial institution, as a wholly owned subsidiary in 1994.
The parent company was formed in 1955 as a joint-venture of the World Bank,
India’s public-sector banks and public-sector insurance companies to provide project
financing to Indian industry. It is an Indian multinational banking and financial
services company headquartered in Mumbai with its registered office in Vadodara.

The CSR Policy of the Bank sets the framework guiding the Bank’s CSR activities. It
outlines the governance structure, operating framework, monitoring mechanism and
principles for selecting CSR activities. The CSR Policy pertains to all activities
undertaken by the Bank towards fulfilling its corporate social responsibility
objectives.

The Bank’s Philosophy on Code of Governance:

ICICI Bank’s corporate governance philosophy encompasses regulatory and legal


requirements, which aims at a high level of business ethics, effective supervision and
enhancement of value for all stakeholders. The corporate governance framework
adopted by the Bank already encompasses significant portion of the recommendations
contained in the “Corporate Governance Voluntary Guidelines 2009” issued by the
Ministry of Corporate Affairs, Government of India.

39
5.6 ICICI BANK
Particulars 2017-18 2018-19 2019-20 2020-21 2021-22

Total no. of Directors 10 8 12 13 12

Non Executive Directors 7 6 9 8 9

Women Executive 3 1 3 3 2
Directors

Total no. of Board 13 6 8 12 10


Meetings

Audit Committee Meetings 13 6 12 10 17

Risk Management 7 7 7 9 13
Meetings

C.S.R Committee 3 3 3 3 4
Meetings

Stakeholder relationship 5 3 4 4 5
committee meetings

ROA 0.34 0.77 1.26 1.31 1.65

ROE 3.19 6.63 10.11 11.21 13.94

EPS 5.23 10.56 15.31 24.01 33.66

40
3. AXIS BANK:

Axis Bank is the third largest of the private-sector banks in India offering a
comprehensive suite of financial products. The bank has its headquarters in
Ahmadabad. The Bank offers the entire spectrum of financial services to customer
segments covering Large and Mid-Corporates, MSME, Agriculture and Retail
Businesses.

Axis Bank provides products and services related to transaction banking to customers
in areas of current accounts, cash management services, capital market services, trade,
foreign exchange and derivatives, cross-border trade and correspondent banking
services, and tax collections on behalf of the Government and various State
Governments in India.

The Bank’s Philosophy on Code of Governance:

The Bank’s policy on Corporate Governance has been:

• To enhance the long-term interest of its shareholders, provide good management,


adopt prudent risk management techniques and comply with the required standards of
capital adequacy, thereby safeguarding the interest of its other stakeholders such as
depositors, creditors, customers, suppliers and employees.

• To institutionalize accountability, transparency and equality of treatment for all its


stakeholders, as central tenets of good corporate governance and to articulate this
approach in its day-to-day functioning and in dealing with all its stakeholders.

41
5.7 AXIS BANK

Particulars 2017-18 2018-19 2019-20 2020-21 2021-22

Total no. of Directors 15 14 11 13 12

Non Executive Directors 8 9 8 9 10

Women Executive 3 2 1 3 3
Directors

Total no. of Board 9 12 10 8 12


Meetings

Audit Committee Meetings 15 18 10 11 15

Risk Management 7 7 4 5 5
Meetings

C.S.R Committee 4 3 4 4 5
Meetings

Stakeholder relationship 4 5 1 2 2
committee meetings

ROA 0.58 0.03 0.61 0.66 1.1

ROE 7.01 0.43 6.59 6.48 11.3

EPS 18.2 1.13 15.41 22.15 42.48

42
4. YES BANK:

YES Bank has been recognized amongst the Top and Fastest Growing Banks in
various Indian Banking League Tables by prestigious media houses and Global
Advisory Firms, and has received several national and international honors for our
various Businesses including Corporate Investment Banking, Treasury, transaction
banking, and Sustainable practices through responsible banking.

The Bank’s Philosophy on Code of Governance:

• YES BANK truly believes in the spirit of Professional Entrepreneurship. The Bank
is committed towards conducting business and dealing with all its stakeholders, with
highest ethical standards and in compliance with all applicable laws and regulations.

• All executives must therefore conduct themselves with integrity, honesty, in a


professional manner and avoid inappropriate behavior.

• This Code of Conduct covers a wide range of business practices and procedures. It
does not cover every issue that may arise, but it sets out basic principles to guide all
executives. They must refer to other organizational policies, guidelines, operational
procedures, Terms & Conditions of their appointment letter, etc. for better
understanding of the governance frameworks within the Bank.

• All executives are required to abide by the organization-wide standards set forth in
this Code. Some business units may define or adopt supplementary policies and / or
codes of conduct which executives in that unit may be required to adhere to; however,
all such policies shall be reviewed and approved by Human Capital Management and
should not dilute or conflict with the Code of Conduct laid out in this document.

• This Code is not a contract, and no contract is implied. If any part of this Code
conflicts with applicable law, the law will prevail. If any part of this Code is deemed
invalid, the validity and enforceability of its other parts & provisions shall not be
affected.

43
5.8 YES BANK
Particulars 2017-18 2018-19 2019-20 2020-21 2021-22

Total no. of Directors 11 12 9 8 11

Non Executive Directors 5 6 4 4 4

Women Executive 2 2 1 1 1
Directors

Total no. of Board 8 13 11 20 38


Meetings

Audit Committee Meetings 6 9 9 8 7

Risk Management 6 6 4 7 8
Meetings

C.S.R Committee 2 2 3 3 3
Meetings

Stakeholder relationship 2 2 2 2 4
committee meetings

ROA 0.45 1.35 1.54 -1.26 0.33

ROE 6.39 16.4 15.09 -10.42 3.15

EPS 7.45 18.43 15.78 -1.63 0.43

44
Regression of all public sector bank
INDEPENDENT VARIABLES DEPENDENT VARIABLES

Audit committee meetings ROA

Risk management meetings ROE

C.S.R committee meetings EPS

1. SBI BANK
H0: There is no impact of corporate governance on ROA
H1: There is an impact of corporate governance on ROA

ROA as a dependent variable:


Regression Statistics
Multiple R 0.938727
R Square 0.881209
Adjusted R Square 0.524835
Standard Error 0.240098
Observations 5

ANOVA

df SS MS F Significance
F
Regression 3 0.427633 0.142544 2.472707 0.429986
Residual 1 0.057647 0.057647
Total 4 0.48528

45
Coefficient Standar t Stat P- Lower Upper Lower Upper
s d Error value 95% 95% 95.0% 95.0%
Intercept -1.86118 0.9289 -2.00 0.294 -13.66 9.942 -13.66 9.942

Audit -0.05882 0.3773 -0.15 0.901 -4.85 4.736 -4.854 4.736


Committee 3
Meetings
Risk 0.341176 0.6987 0.48 0.71 -8.53 9.220 -8.53 9.220
Managemen
t Meetings
C.S.R 0.171765 0.1794 0.956 0.513 -2.10 2.452 -2.10 2.452
Committee
Meetings

Interpretation:
In order to test whether there is influence of independent variable on financial
performance that is ROA. We have run a test regression equal to 0.88 which is almost
closer to 1 therefore there is relationship between corporate governance and ROA.
There is relationship between corporate governance and ROA but there is no
significant impact between two variable because value of P is greater than 0.05.

H0: There is no impact of corporate governance on ROE


H1: There is an impact of corporate governance on ROE

ROE as a dependent variable:


Regression Statistics
Multiple R 0.935816
R Square 0.875751
Adjusted R Square 0.503006
Standard Error 4.510413
Observations 5

ANOVA
df SS MS F Significance
F
Regression 3 143.3911 47.79702 2.349461 0.439328
Residual 1 20.34382 20.34382
Total 4 163.7349

46
Coefficients Standard t Stat P- Lower Upper Lower Upper
Error value 95% 95% 95.0% 95.0%
Intercept -33.9835 17.45 -1.94 0.302 -255.72 187.76 -255.72 187.7603

Audit -0.81647 7.089 -0.115 0.927 -90.89 89.264 -90.897 89.26435


Committee
Meetings
Risk 5.833529 13.12 0.444 0.733 -160.96 172.63 -160.96 172.6308
Management
Meetings
C.S.R 3.055294 3.371 0.906 0.531 -39.78 45.8972 -39.7867 45.89727
Committee
Meetings

Interpretation:
In order to test whether there is influence of independent variable on financial
performance that is ROE. We have run a test regression equal to 0.87 which is almost
closer to 1 therefore there is relationship between corporate governance and ROE.
There is relationship between corporate governance and ROE but there is no
significant impact between two variable because value of P is greater than 0.05.

H0: There is no impact of corporate governance on EPS


H1: There is an impact of corporate governance on EPS

EPS as a dependent variable:

Regression Statistics
Multiple R 0.944899
R Square 0.892835
Adjusted R Square 0.571339
Standard Error 11.26403
Observations 5

ANOVA
df SS MS F Significance
F
Regression 3 1057.071 352.357 2.777126 0.40924
Residual 1 126.8783 126.8783
Total 4 1183.949

47
Coefficients Standard t Stat P-value Lower Upper Lower Upper
Error 95% 95% 95.0% 95.0%

Intercept -89.9418 43.582 -2.0637 0.2872 -643.7 463.82 - 463.8277


643.711

Audit -6.36824 17.704 -0.3596 0.7801 -231.33 218.59 - 218.5941


Committee 231.331
Meetings
Risk 22.85176 32.783 0.6970 0.6124 -393.6 439.40 - 439.401
Management 393.697
Meetings

C.S.R 8.377647 8.4203 0.994927 0.501619 -98.61 115.3686 - 115.3686


Committee 98.6133
Meetings

Interpretation:
In order to test whether there is influence of independent variable on financial
performance that is EPS. We have run a test regression equal to 0.89 which is almost
closer to 1 therefore there is relationship between corporate governance and EPS.
There is relationship between corporate governance and EPS but there is no
significant impact between two variable because value of P is greater than 0.05.

48
2. PANJAB NATIONAL BANK
H0: There is no impact of corporate governance on ROA
H1: There is an impact of corporate governance on ROA
ROA as a dependent variable:

Regression Statistics
Multiple R 0.654386
R Square 0.428221
Adjusted R Square -1.28712
Standard Error 1.202291
Observations 5

ANOVA
df SS MS F Significance
F
Regression 3 1.082576 0.360859 0.249642 0.860867
Residual 1 1.445504 1.445504
Total 4 2.52808

Coefficients Standard t Stat P-value Lower Upper Lower Upper


Error 95% 95% 95.0% 95.0%
Intercept 1.655417 7.108616 0.232875 0.854343 -88.6681 91.97894 -88.6681 91.97894

Audit -1.12375 1.532627 -0.73322 0.597227 -20.5976 18.35012 -20.5976 18.35012


Committee
Meetings
Risk 0.7225 0.850148 0.849852 0.55156 -10.0797 11.52466 -10.0797 11.52466
Management
Meetings
C.S.R -0.18958 1.176977 -0.16108 0.898329 -15.1445 14.76533 -15.1445 14.76533
Committee
Meetings

Interpretation:
In order to test whether there is influence of independent variable on financial
performance that is ROA. We have run a test regression equal to 0.42 so there is no
relationship between corporate governance and ROA.
There is relationship between corporate governance and ROA but there is no
significant impact between two variable because value of P is greater than 0.05.



49
H0: There is no impact of corporate governance on ROE
H1: There is an impact of corporate governance on ROE

ROE as a dependent variable:


Regression Statistics
Multiple R 0.678914
R Square 0.460924
Adjusted R Square -1.1563
Standard Error 23.24974
Observations 5

ANOVA

df SS MS F Significance F

Regression 3 462.1845 154.0615 0.285009 0.842238

Residual 1 540.5504 540.5504

Total 4 1002.735

Coefficient Standar t Stat P-value Lower Upper Lower Upper


s d Error 95% 95% 95.0% 95.0%
Intercept 28.21583 137.465 0.20525 0.87111 -1718.45 1774.88 -1718.45 1774.88
4 8 9
Audit -22.5125 29.6377 -0.75959 0.58644 -399.095 354.070 -399.095 354.070
Committee 2 5 4 4
Meetings
Risk 14.865 16.4400 0.90419 0.53200 -194.026 223.755 -194.026 223.755
Managemen 5 4 3 6 6
t Meetings
C.S.R -3.33417 22.7602 -0.14649 0.9074 -292.53 285.861 -292.53 285.861
Committee 2 8 8
Meetings

Interpretation:
In order to test whether there is influence of independent variable on financial
performance that is ROE. We have run a test regression equal to 0.46 so there is no
relationship between corporate governance and ROE.
There is relationship between corporate governance and ROE but there is no
significant impact between two variable because value of P is greater than 0.05.

50
H0: There is no impact of corporate governance on EPS
H1: There is an impact of corporate governance on EPS

EPS as a dependent variable:

Regression Statistics
Multiple R 0.673247
R Square 0.453262
Adjusted R Square -1.18695
Standard Error 38.59783
Observations 5

ANOVA
df SS MS F
Significance
F
Regression 3 1235.08 411.6934 0.276343 0.846714
Residual 1 1489.793 1489.793
Total 4 2724.873

Coefficient Standar t Stat P-value Lower Upper Lower Upper


s d Error 95% 95% 95.0% 95.0%
Intercept 38.25875 228.2119 0.16764 0.89425 -2861.45 2937.96 - 2937.96
6 7 6 2861.45 6
Audit -34.9138 49.20278 -0.70959 0.60712 -660.094 590.266 - 590.266
Committee 1 8 660.094 8
Meetings
Risk 24.3725 27.29279 0.89300 0.53594 -322.415 371.160 - 371.160
Managemen 1 6 3 322.415 3
t Meetings
C.S.R -6.29625 37.78516 -0.16663 0.89488 -486.402 473.809 - 473.809
Committee 4 7 486.402 7
Meetings

Interpretation:
In order to test whether there is influence of independent variable on financial
performance that is EPS. We have run a test regression equal to 0.45 there is no
relationship between corporate governance and EPS.
There is relationship between corporate governance and ROA but there is no
significant impact between two variable because value of P is greater than 0.05.

51
3. BANK OF BARODA
H0: There is no impact of corporate governance on ROA
H1: There is an impact of corporate governance on ROA
ROA as a dependent variable:

Regression Statistics
Multiple R 0.967182
R Square 0.935441
Adjusted R Square 0.741764
Standard Error 0.264575
Observations 5

ANOVA
df SS MS F Significance
F
Regression 3 1.01428 0.338093 4.829905 0.319995
Residual 1 0.07 0.07
Total 4 1.08428

Coefficients Standard t Stat P-value Lower Upper Lower Upper


Error 95% 95% 95.0% 95.0%
Intercept 1.22 1.652271 0.738378 0.595096 -19.7741 22.2141 -19.7741 22.2141

Audit -0.47 0.132288 -3.55287 0.174666 -2.15087 1.210873 -2.15087 1.210873


Committee
Meetings
Risk 0.395 0.180278 2.191066 0.272577 -1.89564 2.685644 -1.89564 2.685644
Management
Meetings
C.S.R 0.715 0.287228 2.48931 0.24318 -2.93458 4.364579 -2.93458 4.364579
Committee
Meetings

Interpretation:
In order to test whether there is influence of independent variable on financial
performance that is ROA. We have run a test regression equal to 0.93 which is almost
closer to 1 therefore there is relationship between corporate governance and ROA.
There is relationship between corporate governance and ROA but there is no
significant impact between two variable because value of P is greater than 0.05.

52
H0: There is no impact of corporate governance on ROE
H1: There is an impact of corporate governance on ROE

ROE as a dependent variable:


Regression Statistics
Multiple R 0.971059
R Square 0.942955
Adjusted R Square 0.771819
Standard Error 4.057449
Observations 5

ANOVA
df SS MS F
Significance
F
Regression 3 272.1302 90.71006 5.509972 0.301186
Residual 1 16.46289 16.46289
Total 4 288.5931

Coefficients Standard t Stat P-value Lower Upper Lower Upper


Error 95% 95% 95.0% 95.0%
Intercept 23.99 25.33876 0.946771 0.517402 -297.969 345.9495 -297.969 345.9495

Audit -7.7275 2.028724 -3.80904 0.163445 -33.5049 18.04989 -33.5049 18.04989


Committee
Meetings
Risk 6.263214 2.764685 2.265435 0.264638 -28.8654 41.39187 -28.8654 41.39187
Management
Meetings
C.S.R 11.15464 4.404849 2.532356 0.239428 -44.8143 67.12355 -44.8143 67.12355
Committee
Meetings

Interpretation:
In order to test whether there is influence of independent variable on financial
performance that is ROE. We have run a test regression equal to 0.94 which is almost
closer to 1 therefore there is relationship between corporate governance and ROE.
There is relationship between corporate governance and ROE but there is no
significant impact between two variable because value of P is greater than 0.05.

53
H0: There is no impact of corporate governance on EPS
H1: There is an impact of corporate governance on EPS

EPS as a dependent variable:

Regression Statistics
Multiple R 0.971115
R Square 0.943064
Adjusted R Square 0.772257
Standard Error 7.105732
Observations 5

ANOVA
df SS MS F Significance
F
Regression 3 836.3223 278.7741 5.521216 0.300902
Residual 1 50.49143 50.49143
Total 4 886.8137

Coefficients Standard t Stat P-value Lower Upper Lower Upper


Error 95% 95% 95.0% 95.0%
Intercept 45.47 44.37528 1.02467 0.492244 -518.371 609.3114 -518.371 609.3114

Audit -13.62 3.552866 -3.83352 0.162446 -58.7634 31.52344 -58.7634 31.52344


Committee
Meetings
Risk 10.95214 4.84174 2.262026 0.264993 -50.568 72.47229 -50.568 72.47229
Management
Meetings
C.S.R 18.97643 7.714127 2.459958 0.245803 -79.0408 116.9937 -79.0408 116.9937
Committee
Meetings

Interpretation:
In order to test whether there is influence of independent variable on financial
performance that is EPS. We have run a test regression equal to 0.94 which is almost
closer to 1 therefore there is relationship between corporate governance and EPS.
There is relationship between corporate governance and EPS but there is no
significant impact between two variable because value of P is greater than 0.05.

54
4. UNION BANK
H0: There is no impact of corporate governance on ROA
H1: There is an impact of corporate governance on ROA
ROA as a dependent variable:

Regression Statistics
Multiple R 0.733588
R Square 0.538152
Adjusted R Square -0.84739
Standard Error 0.841457
Observations 5

ANOVA
df SS MS F Significance F
Regression 3 0.82503 0.27501 0.388405 0.79307
Residual 1 0.70805 0.70805
Total 4 1.53308

Coefficients Standard t Stat P-value Lower Upper Lower Upper


Error 95% 95% 95.0% 95.0%
Intercept 2.49 4.685035 0.53148 0.689003 -57.039 62.01901 -57.039 62.01901

Audit -0.35929 0.441673 -0.81347 0.565254 -5.97127 5.252701 -5.97127 5.252701


Committee
Meetings
Risk -0.19643 0.652897 -0.30086 0.813953 -8.49228 8.099419 -8.49228 8.099419
Management
Meetings
C.S.R 0.582143 0.582731 0.998991 0.500321 -6.82215 7.986438 -6.82215 7.986438
Committee
Meetings

Interpretation:
In order to test whether there is influence of independent variable on financial
performance that is ROA. We have run a test regression equal to 0.53. There is neutral
relationship between corporate governance and ROA.
There is relationship between corporate governance and ROA but there is no
significant impact between two variable because value of P is greater than 0.05.

55
H0: There is no impact of corporate governance on ROE
H1: There is an impact of corporate governance on ROE

ROE as a dependent variable:


Regression Statistics
Multiple R 0.726676
R Square 0.528058
Adjusted R -0.88777
Square
Standard Error 16.4473
Observations 5

ANOVA
df SS MS F
Significance
F
Regression 3 302.6795 100.8932 0.372969 0.799936
Residual 1 270.5138 270.5138
Total 4 573.1933

Coefficients Standard t Stat P-value Lower Upper Lower Upper


Error 95% 95% 95.0% 95.0%
Intercept 44.94 91.57471 0.490747 0.709563 -1118.63 1208.507 -1118.63 1208.507

Audit -6.68286 8.633036 -0.7741 0.580627 -116.376 103.0103 -116.376 103.0103


Committee
Meetings
Risk -3.84429 12.76168 -0.30124 0.813731 -165.997 158.3082 -165.997 158.3082
Management
Meetings
C.S.R 11.30143 11.39018 0.992208 0.50249 -133.425 156.0274 -133.425 156.0274
Committee
Meetings

Interpretation:
In order to test whether there is influence of independent variable on financial
performance that is ROE. We have run a test regression equal to 0.52. There is neutral
relationship between corporate governance and ROE.
There is relationship between corporate governance and ROE but there is no
significant impact between two variable because value of P is greater than 0.05.

56
H0: There is no impact of corporate governance on EPS
H1: There is an impact of corporate governance on EPS

EPS as a dependent variable:

Regression Statistics
Multiple R 0.65146
R Square 0.4244
Adjusted R -1.3024
Square
Standard Error 54.82199
Observations 5

ANOVA
df SS MS F
Significance
F
Regression 3 2215.971 738.657 0.245772 0.862964
Residual 1 3005.45 3005.45
Total 4 5221.421

Coefficients Standard t Stat P-value Lower Upper Lower Upper


Error 95% 95% 95.0% 95.0%
Intercept 59.18 305.2359 0.193883 0.878083 -3819.21 3937.57 -3819.21 3937.57

Audit -13.7393 28.77555 -0.47746 0.716413 -379.367 351.8887 -379.367 351.8887


Committee
Meetings
Risk -10.9364 42.53709 -0.2571 0.839793 -551.421 529.5485 -551.421 529.5485
Management
Meetings
C.S.R 32.42214 37.96564 0.853987 0.550035 -449.977 514.8213 -449.977 514.8213
Committee
Meetings

Interpretation:
In order to test whether there is influence of independent variable on financial
performance that is EPS. We have run a test regression equal to 0.42. There is neutral
relationship between corporate governance and EPS.
There is relationship between corporate governance and EPS but there is no
significant impact between two variable because value of P is greater than 0.05

57
REGRESSION OF ALL PRIVATE SECTOR BANK
INDEPENDENT VARIABLES DEPENDENT VARIABLES

Audit committee meetings ROA

Risk management meetings ROE

C.S.R committee meetings EPS

1. HDFC BANK
H0: There is no impact of corporate governance on ROA
H1: There is an impact of corporate governance on ROA
ROA as a dependent variable:

Regression Statistics
Multiple R 0.151039
R Square 0.022813
Adjusted R Square -2.90875
Standard Error 0.124727
Observations 5

ANOVA
df SS MS F Significance
F
Regression 3 0.000363 0.000121 0.007782 0.998527
Residual 1 0.015557 0.015557
Total 4 0.01592

Coefficient Standar t Stat P-value Lower Upper Lower Upper


s d Error 95% 95% 95.0% 95.0%
Intercept 1.682045 0.327307 5.13904 0.12235 -2.47678 5.84087 -2.47678 5.84087
4 6 6
Audit 0.010682 0.081962 0.13032 0.91749 -1.03074 1.05210 -1.03074 1.05210
Committee 7 6 4 4
Meetings
Risk -0.00386 0.052515 -0.07357 0.95324 -0.67113 0.6634 -0.67113 0.6634
Managemen 7
t Meetings
C.S.R -0.00545 0.114066 -0.04782 0.96958 -1.45481 1.44389 -1.45481 1.44389
Committee 1 7 7
Meetings

58
Interpretation:
In order to test whether there is influence of independent variable on financial
performance that is ROA. We have run a test regression equal to 0.02. There is no
relationship between corporate governance and ROA.
There is no such relationship between corporate governance and ROA so there is no
significant impact between two variable because value of P is greater than 0.05.

H0: There is no impact of corporate governance on ROE


H1: There is an impact of corporate governance on ROE

ROE as a dependent variable:


Regression Statistics
Multiple R 0.872506
R Square 0.761266
Adjusted R Square 0.045065
Standard Error 0.907473
Observations 5

ANOVA
df SS MS F
Significance
F
Regression 3 2.625973 0.875324 1.062922 0.596384
Residual 1 0.823507 0.823507
Total 4 3.44948

Coefficients Standard t Stat P-value Lower Upper Lower Upper


Error 95% 95% 95.0% 95.0%
Intercept 12.47409 2.38138 5.238177 0.12009 -17.7842 42.73239 -17.7842 42.73239

Audit 0.571364 0.596327 0.958139 0.513608 -7.00568 8.148411 -7.00568 8.148411


Committee
Meetings
Risk -0.27573 0.38208 -0.72165 0.602044 -5.13052 4.579064 -5.13052 4.579064
Management
Meetings
C.S.R 0.201091 0.829911 0.242304 0.848661 -10.3439 10.7461 -10.3439 10.7461
Committee
Meetings

Interpretation:
In order to test whether there is influence of independent variable on financial
performance that is ROE. We have run a test regression equal to 0.76 which is almost
closer to 1 therefore there is relationship between corporate governance and ROE.

59
There is relationship between corporate governance and ROE but there is no
significant impact between two variable because value of P is greater than 0.05.

H0: There is no impact of corporate governance on EPS


H1: There is an impact of corporate governance on EPS

EPS as a dependent variable:

Regression Statistics
Multiple R 0.986556
R Square 0.973293
Adjusted R Square 0.893172
Standard Error 2.96176
Observations 5

ANOVA
df SS MS F Significance
F
Regression 3 319.6807 106.5602 12.14774 0.207147
Residual 1 8.772022 8.772022
Total 4 328.4527

Coefficients Standard t Stat P-value Lower Upper Lower Upper


Error 95% 95% 95.0% 95.0%
Intercept 89.14159 7.772216 11.46926 0.055367 -9.61377 187.897 -9.61377 187.897

Audit -10.8961 1.946258 -5.59851 0.112526 -35.6257 13.83341 -35.6257 13.83341


Committee
Meetings
Risk 4.230773 1.247013 3.392727 0.182475 -11.614 20.07557 -11.614 20.07557
Management
Meetings
C.S.R 7.985091 2.708616 2.948034 0.208193 -26.4311 42.40132 -26.4311 42.40132
Committee
Meetings

Interpretation:
In order to test whether there is influence of independent variable on financial
performance that is EPS. We have run a test regression equal to 0.97 which is almost
closer to 1 therefore there is relationship between corporate governance and EPS.
There is relationship between corporate governance and EPS but there is no
significant impact between two variable because value of P is greater than 0.05.

60
2. ICICI BANK
H0: There is no impact of corporate governance on ROA
H1: There is an impact of corporate governance on ROA
ROA as a dependent variable:

Regression Statistics
Multiple R 0.775312
R Square 0.601108
Adjusted R -0.59557
Square
Standard Error 0.648075
Observations 5

ANOVA
df SS MS F
Significance
F
Regression 3 0.632919 0.210973 0.502315 0.746919
Residual 1 0.420001 0.420001
Total 4 1.05292

Coefficients Standard t Stat P-value Lower Upper Lower Upper


Error 95% 95% 95.0% 95.0%
Intercept -6.80483 8.235241 -0.82631 0.560365 -111.443 97.83384 -111.443 97.83384

Audit -0.01151 0.121042 -0.0951 0.939636 -1.5495 1.526475 -1.5495 1.526475


Committee
Meetings
Risk 0.258081 0.37471 0.68875 0.616032 -4.50306 5.01922 -4.50306 5.01922
Management
Meetings
C.S.R 1.96907 1.971662 0.998685 0.500419 -23.0833 27.02142 -23.0833 27.02142
Committee
Meetings

Interpretation:
In order to test whether there is influence of independent variable on financial
performance that is ROA. We have run a test regression equal to 0.60 so there is
neutral relationship between corporate governance and ROA.
There is relationship between corporate governance and ROA but there is no
significant impact between two variable because value of P is greater than 0.05.

61
H0: There is no impact of corporate governance on ROE
H1: There is an impact of corporate governance on ROE

ROE as a dependent variable:


Regression Statistics
Multiple R 0.814309
R Square 0.663099
Adjusted R -0.3476
Square
Standard Error 4.852475
Observations 5

ANOVA
df SS MS F Significance
F
Regression 3 319.6807 106.5602 12.14774 0.207147
Residual 1 8.772022 8.772022
Total 4 328.4527

Coefficients Standard t Stat P-value Lower Upper Lower Upper


Error 95% 95% 95.0% 95.0%
Intercept 89.14159 7.772216 11.46926 0.055367 -9.61377 187.897 -9.61377 187.897

Audit -10.8961 1.946258 -5.59851 0.112526 -35.6257 13.83341 -35.6257 13.83341


Committee
Meetings
Risk 4.230773 1.247013 3.392727 0.182475 -11.614 20.07557 -11.614 20.07557
Management
Meetings
C.S.R 7.985091 2.708616 2.948034 0.208193 -26.4311 42.40132 -26.4311 42.40132
Committee
Meetings

Interpretation:
In order to test whether there is influence of independent variable on financial
performance that is ROE. We have run a test regression equal to 0.66 so there is
neutral relationship between corporate governance and ROE.
There is relationship between corporate governance and ROE but there is no
significant impact between two variable because value of P is greater than 0.05.

62
H0: There is no impact of corporate governance on EPS
H1: There is an impact of corporate governance on EPS

EPS as a dependent variable:

Regression Statistics
Multiple R 0.949926
R Square 0.902359
Adjusted R 0.609436
Square
Standard Error 7.033932
Observations 5

ANOVA
df SS MS F
Significance
F
Regression 3 457.2395 152.4132 3.080535 0.391283
Residual 1 49.4762 49.4762
Total 4 506.7157

Coefficients Standard t Stat P-value Lower Upper Lower Upper


Error 95% 95% 95.0% 95.0%
Intercept -190.553 89.38183 -2.1319 0.279219 -1326.26 945.1511 -1326.26 945.1511

Audit -0.21965 1.31374 -0.1672 0.894536 -16.9123 16.473 -16.9123 16.473


Committee
Meetings
Risk 6.785058 4.066941 1.668344 0.343759 -44.8903 58.46044 -44.8903 58.46044
Management
Meetings
C.S.R 51.89791 21.39959 2.425182 0.248981 -220.01 323.8055 -220.01 323.8055
Committee
Meetings

Interpretation:
In order to test whether there is influence of independent variable on financial
performance that is EPS. We have run a test regression equal to 0.90 which is almost
closer to 1 therefore there is relationship between corporate governance and EPS.
There is relationship between corporate governance and EPS but there is no
significant impact between two variable because value of P is greater than 0.05.

63
3. AXIS BANK
H0: There is no impact of corporate governance on ROA
H1: There is an impact of corporate governance on ROA
ROA as a dependent variable:

Regression Statistics
Multiple R 0.591891
R Square 0.350334
Adjusted R Square -0.79933
Standard Error 0.43365
Observations 5

ANOVA
df SS MS F Significance
F
Regression 3 0.235703 0.078568 0.228915 0.872233
Residual 1 0.343217 0.343217
Total 4 0.57892

Coefficients Standard t Stat P-value Lower Upper Lower Upper


Error 95% 95% 95.0% 95.0%
Intercept -0.51383 6.461295 -0.07952 0.94948 -82.6124 81.58471 -82.6124 81.58471

Audit -0.09766 0.435735 -0.22413 0.859636 -5.63419 5.438875 -5.63419 5.438875


Committee
Meetings
Risk 0.14766 1.250093 0.118119 0.92515 -15.7363 16.0316 -15.7363 16.0316
Management
Meetings
C.S.R 0.40766 1.316944 0.30955 0.80889 -16.3257 17.14102 -16.3257 17.14102
Committee
Meetings

Interpretation:
In order to test whether there is influence of independent variable on financial
performance that is ROA. We have run a test regression equal to 0.35. There is no
relationship between corporate governance and ROA.
There is relationship between corporate governance and ROA but there is no
significant impact between two variable because value of P is greater than 0.05.

64
H0: There is no impact of corporate governance on ROE
H1: There is an impact of corporate governance on ROE

ROE as a dependent variable:


Regression Statistics
Multiple R 0.99189
R Square 0.983845
Adjusted R 0.93538
Square
Standard Error 0.985007
Observations 5

ANOVA
df SS MS F
Significance
F
Regression 3 59.08804 19.69601 20.30016 0.161395
Residual 1 0.970239 0.970239
Total 4 60.05828

Coefficients Standard t Stat P-value Lower Upper Lower Upper


Error 95% 95% 95.0% 95.0%
Intercept -14.6106 10.86362 -1.34491 0.407026 -152.646 123.4248 -152.646 123.4248

Audit 0.068723 0.732617 0.093805 0.940456 -9.24006 9.377509 -9.24006 9.377509


Committee
Meetings
Risk -0.17872 2.101829 -0.08503 0.945997 -26.885 26.52755 -26.885 26.52755
Management
Meetings
C.S.R 5.256277 2.214228 2.373864 0.253816 -22.8782 33.39071 -22.8782 33.39071
Committee
Meetings

Interpretation:
In order to test whether there is influence of independent variable on financial
performance that is ROE. We have run a test regression equal to 0.90 which is almost
closer to 1 therefore there is relationship between corporate governance and ROE.
There is relationship between corporate governance and ROE but there is no
significant impact between two variable because value of P is greater than 0.05.

65
H0: There is no impact of corporate governance on EPS
H1: There is an impact of corporate governance on EPS

EPS as a dependent variable:

Regression Statistics
Multiple R 0.730736
R Square 0.533975
Adjusted R -0.8641
Square
Standard Error 16.65745
Observations 5

ANOVA
df SS MS F
Significance
F
Regression 3 317.9278 105.9759 0.381935 0.795929
Residual 1 277.4707 277.4707
Total 4 595.3985

Coefficients Standard t Stat P-value Lower Upper Lower Upper


Error 95% 95% 95.0% 95.0%
Intercept -76.5828 183.7146 -0.41686 0.748565 -2410.9 2257.733 -2410.9 2257.733

Audit -3.52553 12.38929 -0.28456 0.823507 -160.946 153.8953 -160.946 153.8953


Committee
Meetings
Risk 10.26553 35.54402 0.288812 0.821007 -441.364 461.8951 -441.364 461.8951
Management
Meetings
C.S.R 22.40553 37.4448 0.598362 0.656726 -453.376 498.1868 -453.376 498.1868
Committee
Meetings

Interpretation:
In order to test whether there is influence of independent variable on financial
performance that is EPS. We have run a test regression equal to 0.53. There is neutral
relationship between corporate governance and EPS.
There is relationship between corporate governance and EPS but there is no
significant impact between two variable because value of P is greater than 0.05.

66
4. YES BANK
H0: There is no impact of corporate governance on ROA
H1: There is an impact of corporate governance on ROA
ROA as a dependent variable:

Regression Statistics
Multiple R 0.704714
R Square 0.496622
Adjusted R -1.01351
Square
Standard Error 1.575562
Observations 5

ANOVA
df SS MS F Significance
F
Regression 3 2.449083 0.816361 0.32886 0.820453
Residual 1 2.482397 2.482397
Total 4 4.93148

Coefficients Standard t Stat P-value Lower Upper Lower Upper


Error 95% 95% 95.0% 95.0%
Intercept 3.204793 8.091077 0.39609 0.759911 -99.6021 106.0117 -99.6021 106.0117

Audit 0.164959 0.730348 0.225863 0.858584 -9.11499 9.444905 -9.11499 9.444905


Committee
Meetings
Risk -0.37194 0.6325 -0.58805 0.661581 -8.40861 7.664727 -8.40861 7.664727
Management
Meetings
C.S.R -0.65517 1.525952 -0.42935 0.74182 -20.0442 18.73389 -20.0442 18.73389
Committee
Meetings

Interpretation:
In order to test whether there is influence of independent variable on financial
performance that is ROA. We have run a test regression equal to 0.49 there is neutral
relationship between corporate governance and ROA.
There is relationship between corporate governance and ROA but there is no
significant impact between two variable because value of P is greater than 0.05.

67
H0: There is no impact of corporate governance on ROE
H1: There is an impact of corporate governance on ROE

ROE as a dependent variable:


Regression Statistics
Multiple R 0.886109
R Square 0.785188
Adjusted R 0.140753
Square
Standard Error 7.11478
Observations 5

ANOVA
df SS MS F
Significance
F
Regression 3 185.0286 61.6762 1.218413 0.568252
Residual 1 50.62009 50.62009
Total 4 235.6487

Coefficients Standard t Stat P-value Lower Upper Lower Upper


Error 95% 95% 95.0% 95.0%
Intercept 17.5543 36.53694 0.480453 0.714865 -446.692 481.8002 -446.692 481.8002

Audit 2.72686 3.298036 0.826813 0.560173 -39.1787 44.63239 -39.1787 44.63239


Committee
Meetings
Risk -2.3076 2.856183 -0.80793 0.567379 -38.5989 33.98365 -38.5989 33.98365
Management
Meetings
C.S.R -6.38256 6.890753 -0.92625 0.524362 -93.9379 81.17276 -93.9379 81.17276
Committee
Meetings

Interpretation:
In order to test whether there is influence of independent variable on financial
performance that is ROE. We have run a test regression equal to 0.78 which is almost
closer to 1 therefore there is relationship between corporate governance and ROE.
There is relationship between corporate governance and ROE but there is no
significant impact between two variable because value of P is greater than 0.05.

68
H0: There is no impact of corporate governance on EPS
H1: There is an impact of corporate governance on EPS

EPS as a dependent variable:

Regression Statistics
Multiple R 0.942776
R Square 0.888827
Adjusted R 0.55531
Square
Standard Error 5.96091
Observations 5

ANOVA
df SS MS F
Significance
F
Regression 3 284.0828 94.69428 2.665008 0.416528
Residual 1 35.53245 35.53245
Total 4 319.6153

Coefficients Standard t Stat P-value Lower Upper Lower Upper


Error 95% 95% 95.0% 95.0%
Intercept 23.76545 30.61141 0.776359 0.57973 -365.189 412.7203 -365.189 412.7203

Audit 3.149091 2.763163 1.139669 0.458503 -31.9602 38.25841 -31.9602 38.25841


Committee
Meetings
Risk -2.83773 2.39297 -1.18586 0.445999 -33.2433 27.56784 -33.2433 27.56784
Management
Meetings
C.S.R -8.70864 5.773216 -1.50845 0.372684 -82.0643 64.64703 -82.0643 64.64703
Committee
Meetings

Interpretation:
In order to test whether there is influence of independent variable on financial
performance that is EPS. We have run a test regression equal to 0.88 which is almost
closer to 1 therefore there is relationship between corporate governance on EPS.
There is relationship between corporate governance and EPS but there is no
significant impact between two variable because value of P is greater than 0.05.

69
CHAPTER 6
FINDINGS AND CONCLUSION

70
Findings:

PUBLIC SECTOR BANK


ROA ROE EPS

SBI 0.88 0.87 0.89

PANJAB 0.42 0.46 0.45


NATIONAL
BANK
BANK OF 0.93 0.94 0.94
BARODA

UNION BANK 0.53 0.52 0.42

In public sector banks, Bank of Baroda and SBI has strong association between
corporate governance variables and financial performance. While Union bank and
PNB results were neutral.

PRIVATE SECTOR BANK


ROA ROE EPS

HDFC BANK 0.02 0.76 0.97

ICICI BANK 0.60 0.66 0.90

AXIS BANK 0.35 0.98 0.53

YES BANK 0.49 0.78 0.88

In private sector banks, every bank has lesser relation between corporate governance
variables and Return on assets while with EPS there is strong relation with corporate
governance variables followed by Return on Equity.

71
Conclusion:
In public sector banks performance is superior thank private sector bank from the
analysis we can see that public banks like, SBI, BOB and UNION bank. These banks
have give better performance of ROA, ROE and EPS. Only PNB is not giving better
performance as other public bank.
SBI, BOB and UNION these banks have strong relationship with corporate
governance only PNB in public sector have neutral relationship with corporate
governance.
Compare to public bank performance of private bank is poor on ROA but ROE and
EPS lead better performance, only AXIS bank is lagging behind in terms of
performance of EPS while performance of ROE is exceptional compare to other
private sector banks.
Relationship between EPS and corporate governance is stronger than ROA and ROE.

72
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