ROLE OF CORPORATE GOVERNANCE IN PRIVATE COMMERCIAL BANKS; EXPERIENCES FROM BANGLADESH

Abstract

Corporate Governance (CG) has become a buzzword in this competitive business world. Nowadays compliance with the global governance standard is mandatory for a company and failing to achieve good governance means creating cemetery for itself. While good governance needs to be an addressed in relation to all companies, but Sound corporate governance is particularly vital for banks. Because banks are liable to their creditors more than any other companies, as most of their funds belong to their creditors or depositors. From banking industry perspective, corporate governance involves the manner in which the business and affairs of individual institutions are governed by their boards of directors and senior management. Banking governance affects the way banks set corporate objectives, run the day to day operations of the business, align corporate activities and behaviours with the expectation that banks will corporate in a safe and sound manner, and in compliance with applicable laws and regulations; and protect the interest of depositors. In this paper attempt has been made to analyze the role and challenges of corporate governance private commercial banks of Bangladesh. Moreover, the focus is also drawn with respect to the standard global practices of good corporate governance, i.e., aligning board’s code of conduct with stagy; board should act with their fiduciary duties; appointing non executive directors; training authorized body to carry CG effectively; limiting board size; infrastructure for internal auditing committee; and proper disclosure of top management’s total compensation package to reduce the criticism of business stakeholders.

Keywords: corporate governance, board of directors, commercial banks

For full paper: fmscresearch@sjp.ac.lk