Evolution of Corporate Governance In India: Issues And Challenge

Abstract

The topic has recently received media attention due to high-profile corporate governance failures in wealthy nations, but finance and economics have long prioritized it. The issue is especially crucial for emerging nations as it is so important for financial and economic growth. According to recent studies, both de jure and de facto investor protection in a nation are crucial for its financial prosperity. India has some of the greatest corporate governance regulations because of the legacy of the English legal system, but poor implementation and the socialist policies of the pre-reform era have had an impact on corporate governance. Pyramiding, finance tunnels, and concentrated ownership of shares are characteristic features of the Indian business environment. Boards of directors have repeatedly watched in silence as the DFI-nominated directors failed or refused to perform their oversight duties. However, significant efforts have been made to restructure the system after liberalization. As an example, the SEBI implemented Clause 49 of the Listing Agreements, which deals with corporate governance. With a drive towards more marketbased governance, the corporate governance of Indian banks is also experiencing reform.