Emerging Trends in Banking Sector - Need for Ethical Values

1. MEANING OF ETHICAL BANKING Earning of profit cannot be the objective of banking activity any more than eating is the objective of Living. In todays competitive environment, a truly successful modern banking can be built up only if the objective of service to customers is constantly kept in view. Then profit will come automatically. Therefore ethical banking is much more important to modern banking. Ethical Banking refers to the moral principles, which are considered right by the modern society and so should govern and guide the modern banking activities. They are the moral principles and rules of conduct, which should guide the activities of modern banking. In short, Ethical Banking is the study of good and evil, right and wrong and just and unjust activities of banking. Ethical banking culture is a blend of ideas, customs, heritage, culture, traditional practices, bankers values and shared meanings that help define normal behaviour of everyone who works in a bank. Apart from this, the bankers are dealers with customer money so they should have a say in how it is used. It is a very good idea to have a set of ethical principles guiding banking activities. Ethical Banking goes beyond literal provision of law and is justified by longterm considerations, contributions to banking growth and social justice. It doesnt denote merely elementary dos and donts, but goes much deeper. In India there is lack of rapport between banks and customers. Each looks upon the other with suspicion. In todays banking scenario, there is an increasing competition among banks which are

emanating, not only from peers, but from new entrants like financial institutions, and mutual funds, it is necessary for greater co-operation between banker and the customer. Mutually sustained relationship is also necessary. Recently RBI has introduced Know Your Customer- KYC norms by which banks come to know more about the customer. It also ensures customer identification and verification of his/ her residential address and also monitors transactions of suspicious nature. 2. MEANING OF ETHICS: The word Ethics is derived from the Greek word ethos which refers to character. In literature, ethics means a set of principle or morals. The adoption of morality results in forming an ethic in the performance of a work. According to the dictionary the term ethics means the principles of conduct governing an individual or group. Ethics deals with morality, but it is not quite the same as morality. It is a kind of investigation including both the activity of investigating and result of that investigation. Morality is the subject matter that ethics investigate. A customer comes to the Bank; the Manager just wishes him Good morning Sir. This is a simple example of Ethical Banking. 3. ETHICAL BANKING IN INDIA Every business concern has its own codes to conduct business effectively. In India we have professional associations for doctors, lawyers and engineers etc. These professional associations try to develop codes of conduct for the members engaged in the profession. These associations offer positive suggestions, tangible steps to prevent

business malpractices and unethical practices. Similarly Reserve Bank of India is the controlling and monitoring authority for the Banking Industry in India. It sets out guidelines and practices to be followed by the Banks. Indian Bankers Association also sets guidance and codes to be followed by member banks and also in customers service. Banking Ombudsman is a new concept, which has been introduced to look after customer grievances. 4. NEED FOR ETHICAL BANKING The use of modern machines has an impact on the functioning of banks and also life style of banking activity. The credit debit machine has improved the functioning of banking organization. The FAX and E-mailing facilities, ATMS, computers have

evolutionised the functioning of banks. Service to customer has further improved in all areas. Techonology develops faster than the regulatory agencies. Hence it necessary to observe ethical banking for the following reasons: 4.1.Survival of the banking unit: Bankers should consider the interest of the customer. Unethical practices of the bankers will lead to the closure of banking unit and create problem to bankers but also to employees and the society in general. Since the banking industry is a service industry the bankers are expected to protect their units in all respects through leadership qualities, integrity, knowledge, skill etc., 4.2. Growth of banking unit: The next reason for observing ethical banking is to ensure the growth of banking activity. Whenever, a banker observes ethics strictly, definitely there can be growth, improvement, development of banking sector.

4.3. Earning goodwill: The prime objective of banking activity is to render service to the customer and to earn profit by adopting ethical banking. Automatically this will lead to earn a good name in the minds of the general public. 4.4. Improving confidence: Ethical banking is necessary to improve the confidence of the customers, employees and the like. 4.5. Maintaining Inter-relationship: The Inter-relationship of banking activity is to be maintained by adopting ethical banking. The proverb No tree can be considered as a forest attests this fact. It is expected that each banking unit should have a smooth relationship with others. The banking companies are making use of information technologies for improving the quality of service. The advancement of Electronic funds transfer system, credit & debit cards, preauthorized transfer, Automated clearing houses, billing machines, ATMs, credit deposit machines, super computers and micro computers, fax machines, any where banking, are to mention a few which have revolutionised the functional properties of the service oriented organization. We cant deny the fact that the use of technologies has made available to the users quality services. The speed, accuracy, perfection is the new term included in the expectation of the customer. A nagging problem within canvassing deposits by banks is the question of ethics in deposit mobilization. The deposit mobilizing officials offer free lunches, tea, snacks, gift item like key bunch, dairy, calendars etc., These attempts at offering gifts to depositors raise the question of how much is too much. At what point did gift to depositors become unethical or illegal. Reserve Bank of India has laid down strict codes of conduct for bankers.

Generally gifts like calendars, key bunches are given to customer to create a friendly relationship between them. When the banks calendar hangs on the walls of the business concern, it helps to increase the business by introduction of new clients. Today, most of the business concerns display a placard OUR BANKERS ARE ABC. If that concern is doing well it automatically attracts more clients to that bank. But when gifts are given to individuals to get their deposits or transfer their money from another bank by false claims, becomes a bribe. Recently many private sector banks have come out with appointment of agents to mobilize their deposits and market their credit products. These agents are paid commission. This helps to prevent bribes. In discussing banking ethics, it is important to make a distinction between personal ethics and banking ethics, although there isnt always a clear boundary between the two deals with how we treat others in our day to day lives. Many of these principles are applicable to ethical situation that occur in banking. However banking ethics often involves choice of banking at organizational level rather than a personal level. Many of the problems will seem different because they involve relationships between two banking organizations, between group of individuals. Frequently, these types of relationship pose problems that are encountered in personal ethics. Personal ethics is necessary to solve problems arising in day to day banking & working. A manager who is personally sound can effectively solve the official problems. Ethical banking and profit go together. Value driven banking sectors are sure to be successful in the long run, though in the short run, they may lose money. 5. PRINCIPLES OF BANKING ETHICS Following are some of the basic principles of Banking Ethics

5.1. Service motive should be in first place rather than profit motive. Even though the very purpose of any business is to earn profit. There should be no discrimination against any particular group of people, say the rich, the poor, the high, the low, the caste, the religion etc., All customers should be treated with the same priority. 5.2. The customers should be fully satisfied. This will ensure that customer will do all his Banking transactions at the bank. 5.3Human feeling is properly considered while rendering service. Politeness and prompt answering by banker will ensure that the customers will fell at home in his Bank. 5.4. The Bankers must make sure that they charge reasonable commission, interest etc., and take every possible step to ensure that the charges and commission rates are brought to the customer notice. The charges must not be higher than fixed rate. 5.5. Bank should not publish misleading advertisement, only service rendered by them and credit products must be advertised also actual interest rates and charges must be published. 5.6. Banker must honour the fundamental rights of the customers like, right to information and right to be heard. 5.7. The Bank must realize their social responsibility and natures infrastructure. Helping under-privileged and poorer society to secure finance can do this and guidance through Government sponsored programme and banks own credit scheme. 5.8. Proper and effective communication system at all levels will lead to proper understanding, co-operation, and co-ordination and team sprit.

Ethical Banking must maintain highest standard of behaviour for the benefit of Bankers, employee customers and society. Employees should have job security, paid fair wages, provided better working conditions, motivated to participate in management. Efficient employees are to be properly motivated and recognized, allowed free speech in work place etc. Proper personnel policy in regard to promotion, transfer should be followed. The best way of promoting high standard of banking activities is through selfregulation. Customer must be given best possible service and treated with respect and fairness. 6. ETHICAL INFLUENCES ON BANKING Ethical considerations are as important in Banking as in other occupation. In the filed of morality, Personal life is not separate from business life. Ethical

consideration is significant while the Bank manager is performing the following function.

BANKING FUNCTIONS Marketing Advertising Location Functions & service Finance personnel Information

ETHICAL Treatment to customer complaints Truth of claims, not deceptive Impact on community and environment Concern for social Value. Profit to re-compensate investors safe guarding assets. Meeting promises to pay Fair treatment in hiring, promotion, dismissal and pensions Credibility, Validity

Factors Affecting Banking Ethics The Banking organisation wants to conduct its business without affecting the interest of society and by assuming responsibility, exercising authority and maintaining dignity. But there are some factors affecting the observation or adoption of banking ethics. 6.1. Abnormal profit motive: The performance of any business is judged by profit it makes. Banks are also no exception to this. Once proper Banking Ethics is followed the banks will get a strong customer base, which in turn will result in good business leading to profit. 6.2. Political uncertainty: The policy of government affects the Banking Ethics to some extent. If government changes, automatically policies adopted also change. It becomes difficult for the Banking Industry to change its working for short periods. Only stable Government can ensure that banking ethics more effectively. 6.3. Unjust legislation: An act is passed after thorough discussion and analysis but the person who participates in the discussion may know the practical difficulties in the implementation of the act. So a legally right practice may not be ethically right. The persons formulating the act must have firsthand experience and practical knowledge in the concerned field. 6.4. Unhealthy competition: With more private sector banks and financial institution entering the Banking Business there is competition in every sectors of Banking. Private Banks provide better service to customers. Unhealthy competition arises between the banks itself, which also affects banking ethics.

6.5. Corruption: Now a day, corruption is prevalent in all sectors of the society. Banking industry is also no exception to this. Every day frauds are being reported by almost all the banks. Non-performing Assets (NPA) are also on the rise, borrowers are not properly repaying loans. This is mainly due to non-adherence of Banking Ethics both by Bankers and Borrowers. 6.6Lack of ethical attitude: Each person differs from others. His definition of ethics also differs according to his thinking. His reasoning of a particular situation also differs from other. As there are no fast rules governing Banking Ethics, a person may not follow them, he may lack ethical attitude. 6.7. Lack of Education: Here education refers to the knowledge of ethical values. Bankers want to follow Banking Ethics strictly, but they do not know what the Banking Ethics is relating to their business. 6.8. Non-Co-operation of workers: Employees do not care about the business ethics. They just want to do their work as quickly as possible for remuneration. The impact of non-adoption of Banking Ethics affects the business and not the employees. 7. ETHICAL COMMITTEES AND FUNCTIONS Many Banks have ethical committees to advice on ethical issues. Such a committee can be high level or comprising the Board of Directors, chaired by the Chairman of the Bank. The committee fields question from employee, helps the Bank establish policy in new or uncertain areas, advises the Board of Directors on ethical issues and over sees the enforcement of the code of ethics.

Functions of Ethical committee are:

a. Holding regular meeting to discuss ethical issues b. Dealing with Gray areas c. Communicating with the web Ball member of the organization. d. Checking for possible violation of the code e. Enforcing the code f. Recording compliance and furnishing violations. g. Reviewing and updating the code h. Reporting activities of the committee to the Board of Directors. 8. RESERVE BANK OF INDIA DIRECTIVE TO BANKS The RBI recently advised Banks to constitute adhoc committee to undertake procedures and performance audit on public services rendered by them.The Bank level committees will be setup for periods of one year and have to complete the work within six months. The RBI has also asked the committees to submit reports to it. The Central Bank has for quite sometime been reiterating the need for betterment of customer services. Now going one step forward the RBI has also outlined the tasks to be assigned to the adhoc committee with a view to support broad based improvement in customers service in relation to various banking services. The committee will look into simplification of procedures and practices with a view to safeguarding the interests of common person be they current or saving account holder, depositors or borrowers, from any unfair procedural practices by banks. Matters pertaining to cases like delay in credit of Interest handling of deceased accounts, release of mortgage documents, reversal of erroneous entries in credit cards, updation of

passbooks, transparency of charges levied on customers, unilateral debits in the customer accounts, foreign exchange transactions will be in the preview the committee. The RBI has also told banks to review the services to customer in respects of a. Meeting their demands for fresh, good notes and coins of all denominations b. Exchanging soiled notes c. Adjudicating mutilated notes and d. Accepting coins and notes either for transactions or in exchange. The committee will also be empowered to review the regulation and procedures prescribed by RBI that impinge on customer service of banks. It is also empowered to make suggestions for rationalization of the regulations. The goal is to reduce the cost and improve the efficiency in transaction. 9. THE IBA CODE FOR BANKING PRACTICE Indian Banks Association (IBA) code for Banking practice (hereinafter referred to as the IBA code/ the code) is issued by the Indian Banks Association (hereinafter referred to as the concurrence of the Reserve Bank of India). This is a non-statutory code issued on a voluntary basis. It is to be observed by the Member Banks in Dealing with their personal customer (hereinafter referred to as customer). It covers specifically banking services such as current accounts, saving and other deposit accounts, advances (loans and overdraft). However, principle of the code will apply to overall relationship between the Member Banks themselves and their customers.

The recommendations set out in the code are supplementary to and do not supplant any relevant legislation codes, guidelines or rules applicable to member Banks of India Act 1934, the Negotiable instrument Act 1881, the banking companies acquisitions and transfer of undertaking Act 1970 and 1980 or any other law in force in India governing the Banking Law and Practice. The Association expects its respective Member Banks to comply with the code in letter and sprit and observance / compliance thereof shall be monitored by a committee constituted at the association. Objectives: The code is intended To promote good Banking practices by setting out the minimum standards which Member Banks will follow in their dealings with customers, To foster customers confidence in the Banking system; To inculcate self-discipline amongst Members Banks with a view to promoting healthy competition and ethical practices in respect of Banking services. 10. REGULATION OF BANKING ETHICS Business ethics are observed by bank because of the consequence that would result due to their non-compliance. The following are the regulations presented briefly. 10.1. Legislative Measures: Enforcing the legislative measures is one of the ways of making bankers follow Ethical Banking. The purpose of enforcing the act is to protect the public interest. The companys Act, Banking Regulation Act 1949, RBI Act 1934, Bankers Books Evidence Act 1891, Consumer Protection Act 1986, the Recovery of

debts due to Banks Acts 1993, Negotiable Instrument Act 1881, Limitation Act 1963, etc., are some measures. 10.2. Goodwill: Banks have to work hard to earn goodwill by adopting ethics. Thereafter, the same practice is followed to maintain the earned goodwill. By providing prompt service, good customer relationship, favourable working environment, the Banks can earn goodwill, which will be an asset for its business growth. 10.3. Social Responsibility: Banks depend on society for its Banking activities; hence it has to give something in turn to the same society. By following social ethics like providing advice, finance to the economically poor and socially backward sections of the society, women entrepreneurs banks can prove their social responsibility. 10.4. Trade Union: There are a number of trade unions like AIBEA, BEFI, BOA etc. which act as watchdog to ensure that banking ethics are followed, employees are properly looked after. workers. 10.5. Governing bodies: The RBI, IBA etc formulate the General practices and laws, which govern the Banking activities. They also maintain better relation between banks. They also provide protection, guidance to bankers. 10.6. Consumer Movement: Today, the consumer movement has developed so much to protect consumer interests. Banking Ethics deals with morality in the banking environment. The customers are protected by the consumer protection Act, 1986. 11. CODE OF BANKING ETHICS Banks play unifying and intermediary roles between fund supplying and fund demanding sides of the society, executing savings and investment functions. Due to their They also act as bridges between the management and the

key role in the economy, while working under the principles of profitability and productivity, banks are obliged to obey ethical principles of banking profession and organizational ethics. With the objectives of improving the quality of banking services, making best use of the available resources and preventing unfair competition between banks, the banks are required to regulate their relationship between other banks, with other institutions and with their customers and employees in compliance with certain ethical principles. In-day-to-day functioning the following codes of conduct can be listed down for an effective ethical behaviour. 1. Be professional in the behaviour by developing Professional dignity and to protect the stability and confidence in the Banking sector. 2. Be diligent, loyal to the organization by ensuring strict practice of system, and procedures, rules, regulations and laws of the organization by considering the

public benefits and interests and to protecting environment. 3. Avoid conflict of interest between your professional and outside activities. 4. Comply with the system and procedures scrupulously. It is said, Prevention is better than cure. Ethics lies in external alertness and awareness of both internal and external environment. As such it is very very important that the following Banking Ethics be constantly kept in mind. Each one of us, a public servant is expected to act honestly and faithfully at all times.

 Always demonstrate a sense of fair play and impartiality in disposing of cases. Show courtesy & consideration in public dealings. Maintain secrecy regarding banks affairs. Observe scrupulously the rules and regulations concerning ones personal conduct. Be discriminate in attending to parties hosted by the Banks constituents, clients etc. Avoid seeking & receiving cash donations. Attend to public grievances promptly. Lay down a time public. Ensure job rotation of those who are on sensitive desks. Keep on assessing the strength of the internal control. Publicize the rules and regulations as widely as possible. Keep a quiet watch over the style of living of the employees. Maintain proper surveillance of employees of doubtful integrity. Do careful scrutiny of control returns. Regular transfer of officers. Close scrutiny of staff accounts. Visits by the controllers to detect danger signals. schedule for each stage of the job concerning the

Where the control & supervision are effective; above said ethical practices will have its own course of action in a good manner in enhancing the level of managerial efficiency and effectiveness. When these procedures are not observed, naturally frauds will take place. As such it is very very important to follow the above ethics. 12. BENEFITS OF ETHICAL CODES Managers are sometimes faced with situations, which are ethically ambiguous without any clear-cut ethical guidelines. These ambiguities can be avoided if there is a formal and specific code of ethics. Such a code specifies following groups. 12.1. Customers: When a Banker follows a code of conduct, its customers are protected against undesirable transactions, like commission, discrimination, misleading advertisement etc., they can deal with confidence and their anxiety is eliminated. 12.2. Employees: Employees know what type of behaviour is often expected. They can easily distinguish between ethical and unethical acts and thereby avoid unethical practices. 12.3. Banker: The Banker gains from a code, because it has to exercise control over the behaviour of its employees. The code also serves as a basis for maintaining customer relation. Code of conduct leads to a healthy competition and fair trade practices in the Banking sector. Therefore the Banks can gain in a socially responsible manner. 16. ETHICS AND LAW Law and ethics aim at one thing defining proper and improper behaviour. But the two are not quite the same. Laws are rules of conduct, approved by a legislature, that guides the bankers performance. Obeying law is presumed to be ethical behaviour. Laws

are a societys attempt to formalize that is, to reduce the rules- ideas about what is right and what is wrong in various walks of life. However it is rarely possible for written rules to capture all the subtle shadings that people give to ethics. Ethical concepts are more complex than written rules. Ethics deals with human dilemmas that frequently go beyond the formal language of law and the meanings given to legal rules. The Government, Laws and Lawyers cannot do everything to protect customers. Technology develops faster at a greater speed,. The Top officials in the Modern Banking Sector often know the dangers in a particulars system or procedure better than the regulatory agencies. Further Government and Banking authority cannot always regulate all activities, which are harmful to the banker and customer. Where law fails, ethical banking can succeed. Law cannot cover all ethical expectations of society. 17.ETHICS TRAINING PROGRAMMES Nearly all-banking sectors, which take ethics seriously, provide training in ethics for their managers and employees. Such training programmes acquaint banking sectors personnel with the official banking policy on ethical issues, and they show how these policies can be translated into the specifies of every day decision making. Often,

simulated cases based on actual events in the banking sector are used to the illustrate how to apply ethical principles to on- the- job problems. Generally speaking, ethics training is most effective, when it is conducted by banking sectors and is steered away from abstract philosophical discussions to focus on specific issue from the work environment of those attending.

18. ETHICS HOT LINES When bank employees are troubled about some ethical issue but may be reluctant to raise it with their immediate superior, they can place a call on the Banking ethical hot time. A member of the ethics committee receives the confidential call and then quickly investigates the situation. Elaborate steps are taken to protect the identity of the caller, so as to encourage more employees to report any deviant behaviour. This technique is advantageous in as much as ethics hotlines encourage internal whistle blowing, which is better for the banks than to have disgruntled employees take their ethical complaints to the media. 19. CONCLUSION The following million dollar questions will make the management of the Banking sectors to think seriously to introduce a thorough change in their thinking, approach and attitude. A sincere effort to find the answers for the following questions will help in several ways in introducing Ethical Banking efficiently and effectively. 1) Whether we are having clear organizational values? 2) Do we have Ethics strategy Goals and objectives and values? 3) Whether we consider Ethics policies and procedures ? 4) Are there measures of Ethical effectiveness? 5) Do we have rewards for ethical behaviour? 6) Do we have Guidelines for Ethical Decision-making? 7) Are we assessing the Ethical climate continuously? 8) Do we encourage building support for Ethical practices? 9) Are we involving Ethical leadership practices?

10) Are we evaluating the impact of Ethical practices? 11) Do we have Ethics Education and Training? 12 ) Do we consider and respect employees personal values? There can be many spectacular or extraordinary illustrations of Ethical Banking only when there is a conducive and congenial climate of identifying himself with the bank. Indicating a sense of belonging, which form the bedrock for Ethical Banking. Trust begets trust, and this is the first step in building Ethical Banking and for a better bon homier between Banker and his customer.THE BANKER NEED NOT DO DIFFERENT
THINGS, THEY NEED TO DO, THINGS DIFFERENTLY

References
BOOKS 1. Dr. C.B Gupta, Management Theory and Practice, Published By. Sultan Chand & Sons, New Delhi. P. 735. 2. RN. Gupta, Principles of Management Sultan Chand & Sons, New Delhi. Edition2005. 3. James. AT Stoner, Redward Ireeman, Daniel. R. Gilbert, Management Prentice Hall of India Private LTD., New Delhi. Edition-2003 4. Dipankar Gupta, Ethics Incorporated, HarperCollins Delhi. Edition-2005 5. K.A.Swathappa, Essentials of Business environment Millennium publishers, Seventh Edition- p 566. 6. Amartya Sen, Resources Values and Development, Oxford University Press, Bombay, Edition -1984. Publishers India, New

7. Jangannath

Mohanty,

Teaching

of

Ethics,

(New

Trends

and

Innovations),Deep&Deep Publications (p) Ltd, NewDelhi,Edition-2005 8. C.R. Kothari. Research Methodology Methods and Techniques. International (P) Ltd., publishing New Delhi. Edition-2004 9. S.L Kaushal, Business Ethics (Concepts, crisis and Solutions), Deep and Deep publications (P) Ltd., New Delhi. Edition-2004. JOURNALS 1.Indian journal of Marketing 2. Bank quest - Journal of Indian Institute of Banking & Finance Mumbai 05 July sep 2004 p.59. 3.Bank quest -Journal of Indian Institute of Banking & Finance Mumbai 05 Jan Mar 2005 p-61. 4. State Bank of India monthly review . 5. Indian Bankers Associations Bulletin. 6. The journal of Banking Studies, Bankers College New Delhi, April 2004 p.22. New Age

World Wide Web 1.www.google.com. 2. www.ethics.org. 3. www.bsp.com. 4. www.bigissuelists.co.uk. 5. www.cir.rbi.org.in.

REFORMATION OF ETHICAL BANKING A SUGGESTIVE FRAME WORK MEANING OF THE ETHICS

ethics means the principles of conduct governing an individual or group.Ethics may be classified into many types according to the situation. For example (a) personal ethics referring to the rules by which an individual lives his or her personal life (b) accounting ethics refers to the code that guides the professional conduct of accountants. (C) Ethical Banking refers to the practices and relationship between bankers & customers. Ethics is the discipline that examines ones moral stands or the moral standards of a society. It asks how these standards are reasonable or

unreasonable, that is, whether they are supported by good reason or poor ones. Therefore a person starts to do ethics when he or she takes the normal stand absorbed from family, society and friends, and asks. o What do these standards imply for the situations in which I find myself? o Do these standards really make sense?

o What are the reasons for or against these standards? o Why should I continue to believe in them? o what can be said against them? o Are they really reasonable for me to hold? o Are their implications in the or that particular situation reasonable?

Banking is concerned with change, adapting to change and creating change G.B.Glies.

INTRODUCTION
Having discussed Ethical Banking in all its theoretical aspect and also the difficulties faced in implementing it, it is but logical that an assessment should be made of its actual working from different angles. Hence, an attempt has been made in this chapter for reforming the implementation. The rationale behind this approach is to find out whether the implementation of ethical banking is really beneficial. The suggestions proposed here are mainly based on the measures suggested by the respondents and officials during their interviews. The personal observations at the time of the visits to the different commercial banks have also been kept in view, while making the suggestions.

The findings of the study will no doubt, help in avoiding some of the major short comings. These should serve as guidelines for the effective and efficient introduction of ethical banking and they are by no means final solutions.

4.2 UNETHICAL WORK HABITS

From the close personal observation of Banking premises the researcher was in position to arrive at the following deadly sins of unethical work habits. These unethical work habits actually eat away the valuable working hours and blacklist the staff as inefficient and unprofessional. Due care and caution should be taken in these areas. Office e-mail should be used for official purpose only. Forwarding of jokes, personal mails chatting on line with friends during working hours, Graphics and animation to co- workers can jam net works. It is not only unprofessional, but also costs the banking organization in terms of wasted computer resources and needless to say productivity. The office telephone is primarily a tool for promoting banking activities and if the line is constantly engaged. While you discuss the latest news and gossip with all and sundry, it may spike the guns of customer trying to reach you.

Remember, more calls coming in can mean more banking transactions. Keep all calls quick and to the point. Spending hours away from the desk and chatting with a colleague in the next cabin, while away valuable office hours are not ethical work habit. Personal errands during office hours reflect an utter disregard for office decorum and will reflect poorly on your professional image. It is observed by the researcher that some of the key employees of a bank engage in unethical acts such as lying on expense incurred, accepting kickbacks, falsifying reports and forging signatures. The following factors can be mentioned as the root cause of unethical behaviour. 1. Pressure to balance work and family. 2. Poor communication. 3. Poor leadership 4. Long working hours, heavy work load 5. Pressure of meeting business targets 6. Little or no recognition of personal achievement 7. Company politics. 8. Personal financial worries. Empty slogans displayed in walls and endless preaching of Ethical Banking should be backed by concrete and substantial action. backed by strong action packed and result-oriented programme. It should be

Senior management should set an example to others by adopting the highest standards of the code of conduct, honesty, transparency and trustworthiness. It is observed that there is no establishment of independent HOT LINE OR HELPLINES, to seek guidance and advice, when there is an ethical dilemma or when they encounter unethical conduct in the workplace. It is necessary to create a separate Ethical auditing and consulting functions to resolve Ethical conflicts. Proper and effective communication of ethical Banking goals, rules, expectation, and priorities is very necessary. Establishment of an Ethics Committee, Ombudsman office, Judicial Boards should be made and periodical review is necessary to monitor the activities and to ensure that offenses are not repeated. The code of ethics, values and code of conduct should be signed by the members and displayed in the Bank notice board and in web sites for public viewing. To engage in ethical banking the banker and the customer need to understand ethical language, including the terms, values, rights and duties, moral rules and relationship. It is observed that executives themselves are unhappy about the current Ethical Banking climate.

FRAUDS IN BANKS

The following Table 4.1

shows the number of fraud in public sector

banks. These frauds reinforce the assertion that our bankers are generally unethical. Corruption is not peculiar to our country. It is universal as the Table reveals. The primary duty the Bankers must be to introduce Ethical Banking and eradicate frauds.

TABLE -1 FRAUDS IN PUBLIC SECTOR BANKS S.NO 1 2 3 4 5 6 7 8 9 10 11 12 NAME OF COUNTRY NEW ZEALAND SINGAPORE UNITED KINGDOM GERMANY UNITED STATES HONG KONG JAPAN SOUTH KOREA MEXICO INDIA CHINA INDONESIA NO.OF FRAUDS 9.55 9.25 8.57 8.14 7.79 7.12 6.72 4.29 3.18 2.78 2.16 1.94

Source: News Week March, 1995

It is well known from the above table that most of our businessmen are lured by the fast back culture i.e., to earn as much money and as fast as possible. Ends justify the means for our businessmen. It is not proper and

acceptable.

From the Table -2

it is evident that number of frauds in public sectors

Banks has seen a steady increase in the last few years. At least 2,653 fraud cases were reported in 2004-2005. While this number was 2197 in 2003-2004 and 1,774 in 2002-2003. However the amount involved in fraud has come down. It was Rs 600.16crore in 2004-2005 while the previous year the figure was Rs.654crore. It may however be noted that in 2002-2003 the amount involved in frauds was estimated at Rs.399.55crore.

State Bank of India (SBI) registered the highest number of frauds with a total of 383 cases in 2004 2005 while the amount involved was Rs.90.65crore.

TABLE -2 BANK WISE FRAUDS DETECTED AND AMOUNT IN PUBLIC SECTOR BANKS DURING THE YEAR 2003-04 & 2004-2005

2003-2004 S.No PUBLIC SECTOR BANKS No of Frauds 408 68 99 23 167 314 174 93 57 37 113 119 60 58 56 94 25 49 14 14 29 9 41 34 24 10 8 2197 Amount involved in Rs.(crore) 112 44 29 10 16 150 53 4 13 3 10 22 28 6 14 21 5 13 2 1 20 3 38 3 5 20 9 654

2004-2005 No of Frauds 383 140 161 22 183 210 229 283 64 15 147 122 76 88 62 79 48 62 20 41 29 15 30 39 30 17 8 2653 Amount involved in Rs (crore) 90.65 53.66 50.23 44.52 44.36 34.73 34.27 34.03 27.50 27.12 24.14 22.95 20.36 13.51 12.57 12.56 10.92 10.60 7.9 5.28 4.71 3.66 3.37 2.76 2.62 0.81 0.37 600.16

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

STATE BANK OF INDIA INDIAN BANK CENTRAL BANK OF INDIA ORIENTAL BANK OF COMMERCE CANARA BANK PUNJAB NATIONAL BANK BANK OF BARODA CORPORATION BANK VIJAYA BANK UNITED BANK OF INDIA SYNDICATE BANK BANK OF INDIA UNION BANK OF INDIA INDAIN OVERSEAS BANK STATE BANK OF HYDERABAD UCO BANK STATE BANK OF PATIALA ANDHRA BANK STATE BANK OF TRAVANCORE STATE BANK OF INDORE PUNJAB & SIND BANK STATE BANK OF MYSORE DENA BANK ALLAHABAD BANK S.B OF BIKANER & JAIPUR STATE BANK OF SAURASHTRA BANK OF MAHARASHTRA TOTAL

SOURCE: THE JOURNAL OF BANKING STUDIES, SEP.2005. P.9

COMPUTERIZATION IN PUBLIC SECTOR BANKS

All India wise analysis of computerization in 27 public sector Banks are depicted in the Table -3 From the table -3 it is clear that only 13,078 Branches accounting for 28.11 percent out of 45,628 total Branches are fully computerized

and 35.5 percent of Branches are partially computerized and equal percentage of 36.39 percent Branches are not computerized. It is apparent from the table that state Bank of Patiala Branches are fully computerized and ranks First by securing 79.17 percent. Andhra Bank ranks second by securing 67.87 percent. Among the banks 75.40 percent of syndicate Bank branches are not computerized. Only 100 percent computerization of Branches can render quick and efficient service to the customers there by they can introduces ethical Banking in an effective manner.

TABLE 4.3. COMPUTERIZATION IN PUBLIC SECTOR BANKS S.No 1 2 3 PUBLIC SECTOR BANKS STATE BANK OF INDIA PUNJAB NATIONAL BANK CENTRAL BANK OF INDIA Total No. of Branches 9038
(100%)

Branches Fully Computerized 3177

(35.15%)

Branches partially Computerized 3870

(42.82%)

Branches Not Computerized 1991

(22.03%)

3864
(100%)

268
(6.94%)

2409
(62.34%)

1187
(30.72%)

3114
(100%)

983
(31.57%)

238
(7.64%)

1893
(60.79%)

4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27

BANK OF BARODA BANK OF INDIA CANARA BANK ALLAHABAD BANK UNION BANK OF INDIA SYNDICATE BANK UCO BANK INDIAN OVERSEAS BANK INDIAN BANK UNITED BANK OF INDIA BANK OF MAHARASHTRA DENA BANK ANDHRA BANK ORIENTAL BANK OF COMMERCE STATE BANK OF HYDERABAD VIJAYA BANK SBBI PUNJAB & SIND BANK STATE BANK OF PARTIALA STATE BANK OF TRAVANCORE CORPORATION BANK STATE BANK OF MYSORE STATE BANK OF INDORE STATE BANK OF SAURASHTRA Total

2735
(100%)

563
(20.59)

1204
(44.02)

968
(35.39)

2531
(100%)

976
(38.56%)

1094
(43.22%)

461
(18.22%)

2415
(100%)

760
(31.74%)

863
(35.73%)

792
(32.8%)

2056
(100%)

399
(19.41%)

340
(16.54%)

1317
(64.05%)

2021
(100%)

113
(5.59%)

1270
(62.84%)

638
(31.57%)

1742
(100%)

235
(13.49%)

1080
(62%)

427
(75.49%)

1710
(100%)

41
(2.4%)

444
(25.96%)

1225
(71.64%)

1432
(100%)

460
(32.12%)

699
(48.81%)

273
(19.07%)

1381
(100%)

473
(34.25%)

47
(3.4%)

861
(62.35%)

1301
(100%)

240
(18.45%)

361
(27.75%)

700
(64.2%)

1229
(100%)

543
(44.18%)

280
(24.67%)

686
(55.82%)

1135
(100%)

469
(41.32%)

386
(34.01%)

1077
(100%)

731
(67.87%)

26
(2.41%)

320
(29.72%)

977
(100%)

172
(17.6%)

716
(79.29%)

89
(9.11%)

887
(100%)

156
(17.59%)

337
(37.99%)

394
(44.42%)

829
(100%)

133
(40.17%)

8
(0.97%)

488
(58.86%)

802
(100%)

346
(43.14%)

5
(0.62%)

451
(56.24%)

753
(100%)

37
(4.91%)

566
(75.17%)

150
(19.92%)

725
(100%)

574
(79.17%)

4
(0.55%)

147
(20.28%)

674
(100%)

217
(32.19%)

339
(50.3%)

118
(17.51%)

663
(100%)

423
(63.8%)

157
(25.99%)

240
(36.2%)

604
(100%)

145
(24%)

302
(50.01%)

423
(100%)

104
(24.59%)

120
(28.37%)

199
(47.04%)

410
(100%)

140
(31.15%)

39
(9.51%)

231
(59.34%)

45628
100%

13078
(28.11%)

16516
(35.5%)

16934
(36.39%)

Source: The Journal of Banking Studies. July - 2002.P.13

4.5 CORE VALUES AND ETHICAL CONCEPTS

 Failure is never final, and success never ending. So steps should be taken to introduce core values and Ethical concepts will help in many ways to introduce and implement Ethical Banking effectively. The banker and customer must have proper understanding of the following concepts, so that they can interpret it and adhere to a code of Ethics that will encompass both individual gains and altruism. Then only it will serve as a lubricant fostering the smooth operations of Banking activities with greater co-operation and co-ordination. ACCEPTANCE: The mental attitude that something is believable and should be accepted as true. ALLEGIANCE: the act of binding yourself (intellectually or emotionally) to a course of action. AUTHENTIC: Conforming to fact and worth of belief CITIZESHIP: The status of a citizen with rights and duties COMMITMENT: Deeply Involved and bound to an action CONCERN: Something that interest you because it is important or affects you CONDUCT: Manner of acting or conducting yourself COURAGE: A quality of spirit that enables you to face danger of pain without showing fear DEDICATION: Commitment towards particular purpose (or) cause DUTY: to fulfill your obligations

 EMPATHY: Identification with and understanding of anothers situation, feeling and motives. Look at the world from the other persons perspective. EQUALITY: The quality of being the same in quantity or measure or values (or) value Status ETHICS: The way people behave based on how their belief about what is right and wrong influence behaviour. EXCELLENCE is the pursuit and achievement of exceptional quality FAIRNESS: Conformity with rules (or) standards the Judge recognized the fairness of my claim. FAITH: Confidant belief in the truth, values or trustworthiness of a person, idea or thing. FORGIVENESS: Compassionate feeling that supports a willingness to forgive. GENUINE: Actually possessing the alleged or apparent attribute (or) Character, Genuine leather GOODNESS: The quality or state of being morally sound. HOPE: The feeling that something desired can be had (or) will happen. HONESTY: is being forthcoming and truthful when we interact with others and ourselves. It ensures sincerity in our relationships both internally and externally.

 INTEGRITY: to do whats right; legally and normally JOY: Gladness or pleasure or delight JUSTICE: The state of action or principle of treating all persons usually in accordance with the Law. LIBERTY: The condition of Being free from restriction or control LOVE: A feeling of deep desire and affection towards a person LOYALITY: to bear true faith and allegiance to others. MERCY: Forgiveness shown towards someone whom you have the power to punish PEACE: the absence of mental stress or anxiety PERCEPTION: Knowledge gained by perceiving a man admired for the depth of his perception. PERSEVERANCE: Steady persistence in adhering to a course of action, a belief or purpose steadfastness. PRUDENCE: Attentiveness to possible hazard caution (or) circumspection as to danger or risk . REASON: A rational motive for a belief or action RESOURCEFULNESS: the quality of being able to cope with a difficult situation i.e., a man of great resourcefulness. RESPECT: Something that you consider important to another. RESPONSIBILITY: - obligations that come with the job SINCERITY: Genuineness, honesty, and freedom from duplicity.

 STEWARDSHIP: Stewardship is responsibility for taking good care of resource entrusted to one. TOLERANCE: Ability to endure stress, pain, radiation etc., TRUST: is the result of promise kept TRUTH: Truth is a comprehensive term that in all of its nuances implies accuracy and honesty TEAMWORK: work with others towards the common goal VALUES: cone belief that guide and motivate attitude and actions. WISDOM: The ability to discern or judge what is true (or) lasting, insight (it is a characteristic of wisdom not to do desperate thing) WORK: Physical or mental or activity directed toward the production or accomplishment of something.

4.6 CONCLUSION
There can be many spectacular or extraordinary illustrations of Ethical Banking only when there is a conducive and congenial climate of identifying himself with the bank. Indicating a sense of belonging, which form the bedrock for Ethical Banking. Trust begets trust, and this is the first step in building Ethical Banking and for a better bon homier between Banker and his customer. THE BANKER NEED NOT DO DIFFERENT THINGS, THEY NEED TO DO, THINGS DIFFERENTLY`