Reforms in the Indian banking sector call for strong corporate governance to enhance the stakeholders' value.

Renowned Economist, Milton Friedman, while defining corporate governance, states "The purpose of Corporate governance is to conduct the business in accordance with owner or shareholders' desires, which generally will be to make as much money as possible, while conforming to the basic rules of the society embodied in law and local customs." In this definition, there is a stress on the economic concept of market value maximization and thereby champions the cause of maximization of shareholders' value. According to J Wolfensohn, "corporate governance is about promoting corporate fairness, transparency and accountability."

Overseas Economic Cooperation Development (OECD) has given ultra modern definition for corporate governance as the system by which business corporations are directed and controlled. The corporate governance structure specifies the distribution of rights and responsibilities among different participants in the organization, such as Board of Directors, Managers, Shareholders and other stakeholders.

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