Impact of Corporate Governance on the Rising NPA’s In India

Corporate governance norms seek to reduce the risk of corporate failures, scams and secure the interests of all stakeholders involved. The increasing economic problems resulting from banking failures and mismanagement has created the need to identify and understand the shortcomings of the current corporate governance regime. Mitigating economic risks and increasing bank profitability is crucial to ensure the smooth operation of economic machinery. It has been observed that the continued failure of Indian banks to adhere to established global norms has resulted in a severe breakdown of internal functioning which has adversely affected the profitability quotient of banks. This deficiency has forced the Indian regulator to come out with several measures to increase profitability to revive the sector by infusing capital. The regulator has identified several corporate governance shortcomings that have led to the piling up of bad loans and Non-performing assets. The outbreak of the novel coronavirus further impaired the already strained banking sector. This paper aims to explore the realm of banking sector keeping the NPA and Corporate Governance norms as its key variables. The author(s) point out the factors that involves in the uncontrollable rise in NPA in the Indian banking sector and make suggestions to areas that require improvements.