The role of Corporate Governance (CG) has become an essential part of the corporate disclosure practice of any successful organization. The most accepted corporate mantra today is that the better the CG practice of an organization the better the shareholder and stakeholder value creation. The same is also applicable to the emerging financial sector of the country, particularly the banking industry. The entry of new private and foreign bankers has made the industry more competitive; at the same time, the role of CG has become more important from the point of view of protection of the stakeholder interest. In this paper an attempt is made to make a detailed comparative study of the CG practice of two leading banks based on their annual report for the financial year 2006-07. The banks under study were The State Bank of India (SBI) and The HDFC Bank Ltd., the former is a leading public sector bank whereas the latter one is a leading private bank. The study is based on the report of CG given by the Narayana Murthy Committee on CG.

As per the Organization for Economic Cooperation and Development (OECD) documents (1999), Corporate Governance (CG) is the system by which organizations are directed and controlled. The CG structure specifies the distribution of rights and responsibilities among different stakeholders of the corporation, such as board, managers, shareholders and employees, and spells out the rules and procedures for making decisions on corporate affairs. In this process of distributing responsibilities, it also provides the structure through which the companies can visualize the objectives, define the means of attaining those objectives and monitoring performance.

Gopal (1998) argued that the increasing efficiency of capital markets and global mobility of funds across the world means that the opportunity cost of shareowners' funds is increasingly real. If Indian corporates do not perform better then the investors, especially Foreign Institutional Investors (FIIs), will look elsewhere.