Empirical Assessment of Corporate Governance Compliance in Public and Private Sector Banks in India: A Legal Study

Corporate governance (CG) in banking plays a crucial role in the context of offering financial stability, transparency, and accountability of financial ecosystem in India. The prevalent study can be considered a non-doctrinal, empirical study on corporate governance compliance in sampled public sector banks (PSBs) and sampled, private sector banks, HDFC Bank, ICICI bank, bandhan bank, Kotak Mahindra bank and IndusInd Bank. According to measurable criteria, including board composition, independence, the strength of the audit committee, the disclosure of related-party transactions, Corporate Social Responsibility practices, risk-management structure and adherence to the norms of RBI/SEBI, the study constructs a Corporate Governance Compliance Index (CGCI) using a statistically realistic, hypothetical, one-year dataset. The paper employs a non-doctrinal approach of mixed-method mixed research options founded on the basis of empirical scoring and simulated data and judicial examination of the case laws in relation to governance such as the case of Chanda Kochhar v. ICICI Bank Ltd., PNB v. Nirav Modi, and precursors of the Supreme Court of the director duties and fiduciary responsibility. The differences in compliance between PSBs and private banks have been estimated using a weighted CGCI model (0-100 scale). It proves that the standard of governing the banks within the private sector is far higher than that of PSBs, with the average of CGCI score standing at 82.4 and 69.2 correspondingly. All these add to the leadership in the private sector namely board greater independence, auditing/risk more effectively, and disclosures transparency. The primary drivers of PSBs behind are the past structure of boards, recommendation by government, and less effective risk-governance mechanisms. The study lists the noteworthy enforcing gaps in the law, and moves on policy recommendations, such as harmonization of SEBI/RBI, which is more punitive, normative responsibility, appointment of boards by professionals, and disclosure provisions that are real time. The research would contribute to the efficacy of governance, in that it will combine the law, empirical, and institutional components in a comparative study of banking in India.