If companies are to reap the full benefits of the global capital market and if they are to attract long term patient capital, corporate governance arrangements must be creditable and well understood across borders. Even if corporations do not rely primarily on foreign sources of capital, adherence to good corporate governance practices will help improve the confidence of domestic investors, may reduce the cost of capital and ultimately induce more stable sources of financing. Controlling shareholders can significantly influence corporate behavior. As owners of equity institutional investor are increasingly demanding a voice in corporate governance. Individual shareholders are highly concerned about obtaining fair treatment from controlling shareholders and management.
Creditors have the potential to serve as external monitors over corporate performance.
Employees and other stakeholders play an important role in contributing to the long-term success of the corporation while governments establish the overall institutional and legal framework for corporate governance. The development of the financial sector and capital market is necessary to provide sustainable support to the economic growth of the country. The core principles for effective Banking supervision require that Credit decisions of the banks are made on an arms length basis free from inappropriate premise from outside parties. Mandatory disclosure is made of NPAs and defaults These can act as warning bells for further exposure and protect the system from undue interference. The capital markets should be made more vibrant by better disclosures and adherence to improved accounting standards.