Will banks become risk-averse in the quest to seek a governance premium?

India Inc will have to pencil in Mint Road's stress on the governance premium in bank lending

The Reserve Bank of India (RBI) has reset the corporate governance template for banks during its twin interactions with the boards of state-run and private banks last month. Boards are to be more vigilant and the scope for chief executive officers to impose their writ is to be curtailed. The issues highlighted by Governor Shaktikanta Das, and Deputy Governors Rajeshwar Rao and M K Jain, will almost certainly act as a guide in Mint Road’s next inspection cycle.

“Governance premium”, therefore, is in the spotlight. Raising financial resources would not be a constraint for banks with robust governance frameworks because