Vol. 2, Issue 2, Part J (2016)

Abstract
Corporate governance is an age old concept which provides for a set of transparent relationships between an institutions management, its board, shareholders and other stakeholders. Corporate governance is gaining centre stage in the recent times due to failure of corporate and wide dissatisfaction among the people with the way corporate works and hence became a widely discussed topic worldwide. Corporate Governance is now recognized as a paradigm for improving competitiveness and enhancing efficiency and thus improving investors’ confidence and accessing capital. Now corporate governance has become a more dynamic concept and a not a mere static one. Bank and Financial Institutions are the backbone of the economic sector of any country. The healthy economic condition of a nation is depicted through the sound functioning of its banks. Banks form a crucial link of a country’s economic sector hence they are universally regulated industry and their wellbeing is imperative for the economy. Working of banks is different from other corporate in many important respects, and that makes corporate governance of bank not only different but also critical. Hence corporate governance is conceptually different for banks. If a corporate fails, the fall outs can be restricted to the stakeholders, but if a bank fails, the impact can spread rapidly through other banks with potentially serious consequences for the entire financial system and the macro economy. The present paper is divided into different sections. In the first part it discusses about corporate governance, its history in India as well as world. Second part talks about applicability of corporate governance as an internal mechanism in banking sector. In third part it talks about the applicability of corporate governance in the banking sector and the mechanism to be adopted for its dynamic usage and in the last part about the various recent developments of corporate governance in banking sector.