Banks need to set standards in corporate governance: Moily

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Mr M. Veerappa Moily, Minister for Corporate Affairs, and Mr M. Narendra, Chairman and Managing Director, Indian Overseas Bank, at the IOB Platinum Jubilee Commemorative Oration on Corporate Governance, in Chennai on Monday. — Bijoy Ghosh

CHENNAI:The Union Cabinet is likely to take up the proposed Companies Law tomorrow, according to the Union Minister of Corporate Affairs, Dr M. Veerappa Moily.

Delivering the Platinum Jubilee Commemorative Oration of the Indian Overseas Bank, on corporate governance with special reference to the banking industry, he said the law will serve to strengthen corporate governance standards.

Due to the crucial role that the financial system has in a developing economy, the Minister said, banks need to set the model standards in corporate governance for others to emulate.

Instability in a bank can have a cascading effect that could destabilise the financial system, affect investor morale and adversely impact the economy.

The retail investors do not have the capability to insulate themselves from the shocks if the banking system is affected.

Financial crisis

Shortfalls in the financial systems were among the primary reasons for the global financial crisis, which India thanks to its prudential financial system had been able to weather better than other economies.

Political governance is a prerequisite for financial regulation. Developing economies have to invest in strengthening the financial reporting system, prudential regulatory measures and investor protection laws, he said.

(Hindu Business Line)

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