The negative externalities of banks and NBFCs are also much higher than those for any nonfinancial entity due to their inter-connectedness. That’s why, globally, banks are regulated and supervised very closely. 5. It is also well-acknowledged that shareholders are driven by maximisation of the returns on their capital. But in banks, this objective is realised largely through the resources raised from depositors.
Hence, as repositories of public resources, banks need to design appropriate 1/4  BIS central bankers' speeches  governance standards and implement internal controls to be worthy of the public trust. Being highly leveraged entities and with their inter-connectedness, there must be separation between ownership and management so that they operate on professional lines. 6.