Introduction to Ethics:
The
term Ethics is derived from the Greek word Ethos, which refers to the
philosophical sciences that deals with the rightness and wrongness of one’s
behavior. Professional ethics deals with regulation of members of a profession
with each other and with society. It deals with aspects like organizational
ethics, in-house behavior and culture and solving problem within and outside
the organization.
In
banking sector that deals with aspects like saving, transfer of funds, exposure
to market; simultaneously taking care of profits and productivity principles, employees
are expected to exhibit certain professional and ethical principles. They not just
have to take care of growth of the bank, but also have to be honest and fair,
improve banking facilities, compete with other bank ( in a fair way), but also
take care of customers, share holder and employees amid ethical principles.
Golden Rules of Ethics:
·
Everything you want others to do to you,
you shall do to others
·
Do not do to others that which you do not wish
them to do to you
·
Do not do anything to others that if done to
you, would cause harm to you
Ethics & Banking:
In
Banking, the success or failure of a bank depends on its long term reputation
and its success or failure records. A bank’s success is based on the most
important aspect ie., trust that they gain from customers, stake holders,
community and from the employees within. They have to maintain ethical
standards in taking up risks. As they get involved with customers who may be depositors
or borrowers, who can be at times risky ( due to external influences during lending
money, proper considerations and standards need to be maintained at all times.
Bankers depend on people to run business and hence they have to frequently reflect
upon their code of ethics.
Balancing Ethical
Principles in Banking:
Principle of Mutual
Trust is of special importance for successful functioning
of the business system. Important and valuable deals are very often contracted
over the phone, in the absence of witnesses, while the relationship between the
participants is dominated by the inviolable principle of mutual trust.
Principle of Mutual
Benefit and Interest means that none of the partners in a business
relationship should feel cheated
Principle of Good
Intentions is very important for business ethics and moral behavior.
This means that one has to treat their
business partner in moral way ( No deception, theft or some other undesirable behavior)
Principle of Business
Compromise and Business Tolerance refers to the
harmonization of the conflicting interests of participants in the business
process;
Principle of ethical
improvement of business behavior represents the
business partner's readiness to accept the mistake that has been made as a
result of his own actions. They should admit the mistakes and respond in an
appropriate way;
Principle of Demonopolization
of One's Own Position, because monopolistic behavior on the
market does not have any ethical market value and
Principle of Conflict
Between One's Own Interests refers to the inability to relate
common to personal interests, with simultaneous adherence to the same ethical
values.
Importance of Ethics in
Banking: Ontologism based on the concept of good as opposed
to evil helps us define the banking business from the point of view of ethics.
The idea of awareness or conscience of the need for banking products or
services inevitably comes to mind. This simplified parallel leads us to the
conclusion that full awareness of related ethics, about the importance of
banking products and services is imminent to all economies, regardless of their
economic development. Incorporation of ethical aspects in banking promotes the
following -
·
To define acceptable behavior
·
To promote high standards of practice
·
To provide a benchmark for self-
evaluation
·
To establish a framework for
professional behavior & responsibilities
·
Stand as a vehicle of occupational
identity
·
It
creates credibility with the public
·
It gives management credibility with
employees
·
It helps in better decision making
·
Law cannot protect society, while ethics
can.
Role of Bank Manger as an ethical and professional
practitioner:
A Bank mangers need to exhibit the values of
professional ethics at work place and set an example for all his / her subordinates
to follow.
1)
They have to comply with all
laws, rules and regulations that are framed
2)
They must ensure fair and
equitable treatment of all employees, stake holders and customers.
3)
They must ensure full,
truthful and transparent disclosure of their financial health.
4)
They must behave as socially
responsible corporate citizens.
5)
Ensure a fair return to the
depositors and safety of deposits.
6)
Minimize spread between cost
of funds and lending rates.
7)
Develop effective risk
management systems.
8)
Treat clients with courtesy.
9)
Offer services promptly.
10) Make proper use of information and communications technology to
enhance efficiency in providing services.
11) Protect minority shareholders' interest.
12) Set up management systems which clearly specify the functions of
the Board, key management personnel such as the Managing Director, Chief
Financial Officer, Company Secretary, Heads of Divisions and Departments etc.
13) Treat employees fairly and compassionately.
14) Arrange for requisite employee training.
15) Ensure non-discrimination in personnel practices and support
employees' and their family members' access to basic health, education and
housing needs.
16) Finance activities which contribute to environmental protection,
employment creation, poverty alleviation and women's empowerment.
17) Devise innovative products without assumption of undue risk.
18) Arrange flexible mortgage payments for poor people's housing.
19) Try to expand operations to unbanked or under banked sectors,
regions and population groups.
20) Emphasize recovery, but with a human face.
21) Develop an internal code of ethics and set up an institutional
arrangement to monitor compliance and suggest remedial actions, where needed.
