The
role of the Central Bank or the Reserve Bank of India
(RBI) is to maintain financial stability in the system,
so that each player can discharge its role effectively.
By the very nature of the activities being undertaken
by the RBI like overseeing payment and settlement
system, making of monetary policy, carrying out supervisory
role, etc., which becomes, all the more important
that a conducive environment for a stable financial
system is needed. For ensuring stability in the system,
proper policy on governance is required.
The
crises and problems in any institution can be attributed
to the fundamental weakness in corporate governance's
practices such as excessive risk taking, inadequate
management of the risk, poor laid down policies, transparency
in disclosures, etc.Corporate
Governance encompasses "the set of relationships
among the corporate entity's management, board of
directors, shareholders and other stakeholders.
It
provides the fundamental structure through which the
objectives of an entity are set and the means of attaining
those objectives and monitoring performance are determined.
Corporate Governance is relevant not only to an individual
institution but also to public and private entities
dealing with it, as well as supervisory authorities,
central banks and governments. Sound governance generates
positive externalities and provides the basis for
a strong and stable financial system." |
