Corporate governance is a much spoken issue, but little has been done to effectively put a sound practice in place. In the area of financial sector, especially in banking, corporate governance deserve added attention. This article tries to encapsulate some of the corporate governance aspects that have come into vogue. It speaks at length about the relevance of rating mechanisms as far as corporate governance is concerned and how some banks have already taken the initiative.

The corporate world, in the recent past, had been rocked, several times, when a large number of respectable, apparently strong and successful, multinational entities, suddenly and in quick succession, declared themselves to be bankrupt. What shocked every one was the fact that these companies, with several very respectable directors on their boards, had successfully managed to project themselves, over a fairly extended period of time, to have been in the pink of health. They had reported robust topline growth, steady increase in profits and reserves, declaring exemplary adherence to regulations as well as to the relevant accounting standards and prescribed norms; in fact, management literature had labeled these as models of corporate governance. In reality, their management had been indulging in some very questionable accounting and other practices, if not downright fraud, painting a rosy picture for the public and the regulators; all the while they were siphoning off a fortune, leaving the company to die, exposing all other stakeholders to financial loss and untold hardships. Corporate Governance (CG) failures have been blamed for the above. What happened in the corporate sector did have some wider implications for the market. One would, however, be well advised to look at the real implications of similar events, if they were to take place in the financial sector, especially in banks.