Ethics in Banking
An ethical bank, also known as a social, alternative, civic, or sustainable bank, is a bank concerned with the social and environmental impacts of its investments and loans. The ethical banking movement includes: ethical investment, impact investment, socially responsible investment, corporate social responsibility, and is also related to such movements as the fair trade movement, ethical consumerism, and social enterprise
What is Ethics
Ethics is a set of principle of right conduct. They are the Rules or standards governing the conduct of a person or the members of a profession or organisation. They help us examine whether a practice or conduct is good or bad within the context of a moral duty.
What is Value
A value is an enduring belief that a specific mode of conduct or a certain end state of existence is personally or socially preferable to an opposite or converse mode of conduct or end state of existence
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Other areas of ethical consumerism, such as fair trade labelling, have comprehensive codes and regulations which must be adhered to in order to be certified. Ethical banking has not developed to this point; because of this it is difficult to create a concrete definition that distinguishes ethical banks from conventional banks. Ethical banks are regulated by the same authorities as traditional banks and have to abide by the same rules. While there are differences between ethical banks, they do share a desire to uphold principles in the projects they finance, the most frequent including: transparency and social and/or environmental values. Ethical banks sometimes work with narrower profit margins than traditional ones, and therefore they may have few offices and operate mostly by phone, Internet, or mail. Ethical banking is considered one of several forms of alternative banking.
Environmentally and socially conscious business practices
In general banks play an intermediary role in the economy; because of this the possibility for banks to contribute to sustainable development is extensive. Jeucken 2002 Banks have efficient and tested credit approval systems, which gives them a comparative advantage in knowledge (regarding sector-specific information, legislation and market developments).Jeucken & Bouma 1999 Banks are experienced and capable of weighing risks and attaching a price to these risks; because of this banks can fulfill an important role in reducing the information asymmetry between market parties and allow them to make better decisions. When depositors allow a bank to invest for them they may assume that the bank will attempt to select investments to maximize their returns. However, if clients are concerned with more than the simple monetary return and they, for instance, are interested in the costs to society and to the environment, then they may need to turn to an ethical bank which takes their ethics and morality into account when investing.
Some businesses externalize costs onto the environment and society. Aiming to create a more equitable distribution of costs in society, banks can raise interest rates or apply tariffs on loans given to clients and projects with high external costs. This would mean that companies would pay more if their business caused extensive environmental damage; taking some of the cost off of society as a whole and putting it on the company. This sort of tariff differentiation could stimulate the internalization of environmental costs in market prices.Jeucken & Bouma 1999 Through such price differentiation, banks have the potential to foster sustainability.Jeucken & Bouma 1999.
Banks may be able to support progress toward sustainability by society as a whole—for example, by adopting a ‘carrot-and-stick’ approach, where environmental and social front-runners would pay less interest than the market price for borrowing capital, while environmental laggards would pay a much higher interest rate.Jeucken & Bouma 1999 Banks can also develop more sustainable products, such as environmental, social, or ethical investment funds. By investing selectively based on values, ethical banks can promote socially/environmentally responsible companies and penalize those who do not conform to these standards. But there is a risk that banks could simply adopt certain practices that make them appear ethical (see greenwashing) while not adopting other practices that would have a greater impact
Ethics can be defined as a system of criteria and measures examining the values, norms and
rules underlying the individual and social relations on such moral grounds as right and wrong
or good and bad. Professional ethics regulates the relationships of members of the relevant
profession with each other and with society, and defines organizational ethics and in-house
behavioral culture by imposing certain rules for resolution of problems originating from
inside or outside the organization.
Performing the investment and saving functions by playing the role of a unifier and mediator
in the society between parties offering and demanding funds, banks, as a part of marketplace,
mainly and naturally target the profitability and productivity principles, which requires them
to operate in strict compliance with certain professional and organizational ethics principles.
Departing from the objectives of growth of banking system, enhancement of banking service
quality, best use of resources, creation of a fair and honest competitive environment among
banks, and prevention of unfair competition, banks are required and expected to regulate their
relations with each other and other organizations, and with their customers, shareholders and
employees in accordance with these ethical principles.
Ethics or moral philosophy is a branch of philosophy that involves systematizing, defending, and recommending concepts of right and wrong conduct. The field of ethics, along with aesthetics, concerns matters of value, and thus comprises the branch of philosophy called axiology.
Ethics seeks to resolve questions of human morality by defining concepts such as good and evil, right and wrong, virtue and vice, justice and crime. As a field of intellectual inquiry, moral philosophy also is related to the fields of moral psychology, descriptive ethics, and value theory.
Three major areas of study within ethics recognized today are:
Meta-ethics, concerning the theoretical meaning and reference of moral propositions, and how their truth values (if any) can be determined
Normative ethics, concerning the practical means of determining a moral course of action
Applied ethics, concerning what a person is obligated (or permitted) to do in a specific situation or a particular domain of action
Our Responsibilities
• What Do We Need to Do? Our Responsibilities
• As an Employee, We are Bank’s Brand Ambassador. Delivering the Promise of Banks Brand rests on us.
• We are expected to:
• Be familiar with, understand and follow the Bank’s Ethics Code in letter and spirit.
• Commit to it as prescribed.
• Be familiar with the policies and procedures relevant to our current role.
• Ask any questions we have about the Code, policies & procedures and how they apply to us.
• Keep the values of STEPS in mind and treat colleagues & customers with respect to protect our reputation.
• Speak up and report a suspected violation of the Code, policies, procedures or law.
• Refer to the Ethical Decision-Making Guide or relevant policy in Resources Section of the Code, if we are not sure on what to do in a situation.
• Understand the Code and be in a position to guide our team properly.
• Foster a culture of ethics & uphold the spirit of the Code in daily actions.
• Make sure that our team feels comfortable in asking questions or raising concerns.
• Never tolerate retaliation or allow others to do so.
• Make sure that we have appropriate delegation before entering into any transaction or risk on behalf of Bank.
• Report a misconduct or to take action to redress the same
SERVICE
Serving our Customers
• We are aware that the Bank is committed to providing best-in-class products, services & solutions to the customers that are consistent with their needs and circumstances.
• We shall make our customers feel valued and important in each transaction.
• We shall treat our customers in the way we want to be treated ourselves.
• We shall put customers’ need above our own and serve them with a smile.
• We shall help our customers to make informed financial decisions.
• We shall treat our all customers fairly regardless of caste, creed, race, religion, disability or gender.
• We shall always seek customer feedback to improve the customer experience.
DOs
• Say “Thank you” to customers after doing their work.
• Listen with empathy - Always.
• Focus on customers’ needs.
• Keep yourselves updated to respond to customers’ queries.
DON’Ts
• Let customers wait.
• Attend to other tasks when dealing with a customer.
• Be inconsistent.
TRANSPARENCY
• Transparency
• Being Transparent we shall respect the right of customers for openness and transparency in their dealings with us at all times.
• We shall be truthful and responsible in all our transactions with all stakeholders.
• We shall always act in good faith and with due care while dealing with internal or external constituencies.
• DOs
• Be open and transparent in your dealings.
• Be accurate while exchanging information about Bank.
• DON'Ts
• Conceal or misrepresent facts regarding a product or service with anyone.
• Misconstrue a transaction.
• Mislead or cover up information while dealing with others
ETHICS Handling Conflicts of Interest- Actual, Potential or Perceived: Competing Fairly
• We are aware that the Bank has faith in open and fair competition and believes in having the competitive advantage through superior performance and shall act with the same spirit.
• We shall deal fairly with our customers and not place our desire to increase our performance before their best interests. For example, we shall not impose undue pressure on a customer or a potential customer to obtain another product or service from us as a precondition of approving a request for a Banks’ product or service.
• DOs
• Compete in good faith.
• Be fair - Always.
• DON’Ts
• Share sensitive information with competition.
• Be unfair while competing.
POLITENESS
Being Polite in Treating Customers
• We shall offer a polite, courteous and empathetic experience to our customers in their interactions with us.
• We shall ensure that we are understanding and understood while dealing with customers and seek to listen them more than we talk.
• We shall project an efficient image of the Bank by being punctual and adhering to the workplace discipline.
• We shall dress* well and convey a seemly impression of the Bank while dealing
• With customers, colleagues and public at large. * [However, there will be no bar in following a religious dress code applicable to any community.]
• DOs
• Determine customers’ need responsibly.
• Consider customers’ circumstances before giving advice especially in case of loans.
• Be a preferred choice of customers - Always.
• Dress smartly - Always.
• DON’Ts
• Be inattentive to a customer.
• Be irresponsible in meeting customer expectation
SUSTAINABILITY
Contributing to the Communities Around
We shall champion sustainability and invest time & resources to make our communities a better place to live and work.
• We shall be engaging with sustainable banking by promoting innovative products & services that protect and conserve our natural resources.
• We shall be pro-active about minimizing carbon footprint through waste minimisation, pollution prevention and adopting clean technology wherever feasible.
• DOs
• Connect with communities around - Give back.
• Be sensitive to social & environmental risks.
• Reduce, reuse & recycle.
• Conserve natural resources.
• DON’Ts
• Waste resources.
• Ignore social conscience.
Avoid participation in the projects that benefit communities.
