Page 40 - Banking Finance October 2023

ARTICLE

Principles of Business Ethics Need and importance of ethics in bank-

Being ethical is of utmost importance for business in present ing
times. Every organisation needs to have a standard code of Similar to any other type of business, there are a lot of
ethics. Influence of strong business ethics will lead to a reasons for ethics to be implemented in banking because it
profitable and successful business firm. The following creates credibility for the banks as it is related to punctuality
undernoted business principles can result into an of fulfilling obligations and honouring the terms of contracts.
unprecedented business success:
Banks need to deliver high quality service to its customers.
Also, with the continuing progression of internalisation, along
Dignity: The most important principle of ethics is to treat with the global integration, the continuous financial
each other with utmost respect regardless of difference, which innovations have brought the possibilities of minimum direct
is treating each individual as an end rather than as a means
influence on banking operations. Ethics helps in dealing with
to an end. Similarly, while dealing with customers, a business' dilemmas, guards reputation and Goodwill as well as helps
ultimate objective should not be only profit making but also
to avoid risk.
the customers' interest. Courtesy is a major element of dignity,
and it is essential to treat people with courtesy.
Principles of ethical banking:
Fairness: It is about displaying concern with actions, process Principles of ethics in Banking business provide a guideline
and consequences that are morally right, honourable and to the banking professional, which helps them to deal with
equitable. The primary advantage of fairness is that it the ethical issues. Banks are responsible not only towards
establishes moral standards for decisions that affect others. its customers, but also to its employees, community,
investors and Government.
Honesty: Honesty means being truthful and straight forward.
It is an attribute that is largely linked to an individual rather Trust : The first and foremost principal of ethical banking is
than a situation. Integrity is also linked to honesty. trust. Money being an integral part of the economy and
standard medium of exchange across the world, the whole
Openness: The concept of openness is that things should banking system is dependent on the trust of the society.
be as they are supposed to be, and not in a concealed Trust is the confidence in quality for attribute of a person or
manner. a thing which also includes truth of a statement,
truthfulness and trustfulness. Trust is defined as a vital factor
Reputation/Goodwill: Goodwill is one of the most in successful leadership and management. Mutual trust has
important assets of a business and also one of the most significant importance for successful functioning of any
difficult to rebuild, if it is lost. Business should work on business system.
building a good reputation along with high morale for its
staff. Good reputation or goodwill helps in resolving many Integrity: It is a very important for business ethics and moral
problems and also has a material value. behaviour. This principle means that there is no intention
to treat the business partner in an immoral way, whether it
Prudence: It is the ability of a business to make right refers to deception, theft or some other undesirable way of
decision and which is gained over a period of time from treating a business partner.
experiences and knowledge. It is required to exercise a
degree of judgement that makes the situation no worse, but Neutrality: Bank should not differentiate among its
rather improve the circumstances. employees and customers and refrain from any kind of
biased behaviour.
Concern for others/Social responsibility: Every business
takes birth, survives and grows with the consent and Reliability: Banks should provide information to its
corporation of the society. Since, it is an integral part of the customers that is understandable, clear and accurate while
society, it makes the business morally responsible towards performing their services and operations.
society to build a better quality of life by harmonizing
organisational actions with society wants'. Transparency: Banks should keep its customers clearly

40 | 2023 | OCTOBER | BANKING FINANCE