Bank Ownership, Board Characteristics and Performance: Evidence from Commercial Banks in India

Sarkar, Jayati; Sarkar, Subrata

doi:10.3390/ijfs6010017

Cited by 51 publications

(54 citation statements)

References 69 publications

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“…As on March 31, 2012, PSBs dominate the banking system in India with 75% share of deposits in the banking system (Sarkar & Sarkar, ).…”

Section: Overview Of the Indian Banking Systemmentioning

confidence: 99%

“…In addition, Clause 49 also stipulates guidelines on composition and operation of audit committee, board procedures, remuneration of directors, management, reporting requirements, and so forth. Although all commercial banks in India are regulated under the Banking Regulation Act, 1949, PSBs are additionally regulated by Ministry of Finance, Government of India, under the Banking Companies Act 1970, Bank Nationalization Act 1980, and State Bank of India Act 1955 (Sarkar & Sarkar, ). Because PSBs are additionally regulated by the Government of India, it significantly influences the way their boards are designed.…”

Section: Governance Setup In Indian Banksmentioning

confidence: 99%

“…Government being the controlling owner, it has exclusive power to nominate directors on the PSBs board. Government has power to nominate Chairman and Managing Director (CMD) of all PSBs, have one central government nominee on the board, nominate two directors (one a workmen employee and other an officer employee of a PSB), and nominate a chartered accountant director and up to six directors from the general category (Sarkar & Sarkar, ). Government has powers to fix the tenure of all whole time directors including the CMD, which has been currently capped at 5 years (Sarkar & Sarkar, ).…”

Section: Governance Setup In Indian Banksmentioning

confidence: 99%

“…Government has power to nominate Chairman and Managing Director (CMD) of all PSBs, have one central government nominee on the board, nominate two directors (one a workmen employee and other an officer employee of a PSB), and nominate a chartered accountant director and up to six directors from the general category (Sarkar & Sarkar, ). Government has powers to fix the tenure of all whole time directors including the CMD, which has been currently capped at 5 years (Sarkar & Sarkar, ). Thus, boards of PSBs are less empowered, less flexible, and are larger in size as compared with private sector banks (Sarkar & Sarkar, )…”

Section: Governance Setup In Indian Banksmentioning

confidence: 99%

“…Sarkar and Sarkar () study found median board size of PSBs as eight against 10 for old private sector banks and 11 for new private sector banks.…”

mentioning

confidence: 99%

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Corporate governance challenges in Indian banks: A public affairs perspective

Pant

Radhakrishnan

2019

Journal of Public Affairs

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Weak governance framework in Indian public sector banks has paralyzed their performance with declining profitability and deteriorating asset quality. In order to tackle the governance issues in Public Sector Banks (PSBs), Indian government established Banks Board Bureau (BBB) in April 2016 to revamp the existing governance structure in PSBs. However, the issue management framework of establishing BBB is not immune to several challenges and has not been able to achieve its desired objectives. This paper looks at the weak governance issue in PSBs from an issue management perspective by using the famous Jones and Chase issue management framework. In light of this framework, the paper makes several recommendations to effectively address the governance challenges in PSBs in India. The findings of this paper may be useful for other emerging economies facing similar governance issues in their banking sector.

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“…As on March 31, 2012, PSBs dominate the banking system in India with 75% share of deposits in the banking system (Sarkar & Sarkar, ).…”

Section: Overview Of the Indian Banking Systemmentioning

confidence: 99%

Section: Governance Setup In Indian Banksmentioning

confidence: 99%

Section: Governance Setup In Indian Banksmentioning

confidence: 99%

Section: Governance Setup In Indian Banksmentioning

confidence: 99%

“…Sarkar and Sarkar () study found median board size of PSBs as eight against 10 for old private sector banks and 11 for new private sector banks.…”

mentioning

confidence: 99%

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Corporate governance challenges in Indian banks: A public affairs perspective

Pant

Radhakrishnan

2019

Journal of Public Affairs

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The effects of the internal control system on the risk, profitability, and compliance of the U.S. banking sector: A quantitative approach

Koutoupis

Malisiovas

2021

Int. J Fin Econ

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This is strong quantitative research investigating whether and how the components of the internal control system affect the credit risk, profitability, and compliance of the U.S. banking sector. Based on the COSO Framework, Basel Committee Frameworks, and the literature, the components of the internal controls are quantified. This quantitative nature distinguishes this study from others in this field since most of the studies up to now have investigated these topics by theoretical approaches. Eleven independent variables are analysed in three different regression models, with credit risk, profitability, and compliance being the dependent variables in each model. After cleaning the data from outliers, several tests are performed, while a panel set of data is used comprising the 210 biggest U.S. bank holding companies. Fixed-effects regression is applied in the three models, while the years under examination are the five fiscal years 2013-2017. Most of the data are taken from the proxy statements (DEF 14A) and the 10-K statements because of their qualitative nature.The key results indicate that Risk Assessment, Control Activities, and Information and Communication components strongly affect credit risk. The first (Control Environment) and last (Monitoring) components have a significant effect on credit risk, though only from the perspective of the board's number and the expertise of the audit committee, respectively. In the same line, internal controls significantly affect the profitability and compliance of U.S. banks, except for the Risk Assessment component in the first case and the Control Environment component in the second case, respectively. Control Activities component and the Information and Communication component have a significant and positive relationship with the banks' profitability, while these two components are significantly and negatively correlated with the banks' compliance.

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Lessons from NPAs crisis in Indian banks

Pant

2017

Journal of Public Affairs

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Nonperforming assets (NPAs) crisis in Indian public sector banks is one of the biggest challenges before the current government in 2017. The finance ministry, Government of India, and the central bank, the Reserve Bank of India, are worried about the surging NPAs in Indian public sector banks because of their huge macroeconomic impact and systemic risk to the financial system. If not paid timely attention, it can hamper the economic and financial stability of the nation. Rising NPAs in Indian public sector banks are a result of bank specific, macroeconomic, and political factors. In order to control the surging NPAs in Indian public sector banks, the government and the Reserve Bank of India have implemented new crisis management framework which however is not immune to several challenges. This paper looks at NPAs crisis from the lens of crisis management, stakeholder 0 s engagement, government relations, and issue management. Harris and Fleisher (2016) identify crisis management, stakeholder engagement, government relations, and issues management as important organizational activities that constitute part of public affairs.This paper follows a tripartite structure where it first investigates the causes of NPAs in Indian public sector banks. Second, it examines the crisis management framework developed by the policy makers and highlights the key challenges. Third, in light of these challenges, it makes recommendations to tackle the NPAs crisis in Indian public sector banks.

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Bank Ownership, Board Characteristics and Performance: Evidence from Commercial Banks in India

Cited by 51 publications

References 69 publications

Corporate governance challenges in Indian banks: A public affairs perspective

Corporate governance challenges in Indian banks: A public affairs perspective

The effects of the internal control system on the risk, profitability, and compliance of the U.S. banking sector: A quantitative approach

Lessons from NPAs crisis in Indian banks

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