Ethics &Governance (overview)

Important Points
 Ethics – an overview

 The word “ethics” is derived from the Greek word “ethikos” which
means character or custom
 As per Chambers Dictionary “ethics” is a code of behavior considered
correct
Understanding ethics:
 An individual or group of persons are influenced and guided by
his/their religious faith. Religious teachings create values in individual
or group of persons. Almost all religious practices are based on similar
principles
 Some of the important guidelines of religions:
 Be kind to all others including animals and natural resources
 Be humble, modest and simple and courteous
 Be truthful to one’s self and others
 Avoid greed, lust, anger which are excesses of desire, love and
annoyance respectively
 Be content in life
 Be happy with others’ achievements/ performance
What is a Code of Ethics

 A code is a set of rules, which are accepted as guiding principles

 A code is adopted by a Corporate, Professional bodies, and/or a
nation

 A Company’s policy statements define the ethical code

 Ethical and Unethical Practices:
 There are many reasons for an individual or group of individuals or corporate and others to follow ethical
or unethical practices
Some of the reasons are:

 Conflict of interest

 Incentives

 Unreasonable targets

 Decision making

 Weak control systems

 Unhealthy competition

 Discrimination
Ethical aspect in Financial Management
Some of the noteworthy unethical issues in the financial activities and markets
are:

 Concealment of facts
 Money Laundering activities
 Misappropriation and diversion of funds
 Lack of internal control
 Non compliance of regulatory and legal frame work
Desired Ethical Practices and Corporate Governance

 Conflict of interest
 Transparency
 Mergers & Acquisitions (M&As)
 Golden parachute
Corporate social responsibility in the financial sector

 The institutions representing the financial sector like banks, mutual funds
and other institutions. like other corporate sector players contribute
significantly to the community development in many ways

 They are motivating banks and financial institutions to play an effective role
in promoting environmental protection and social sustainability through
these projects. In this respect, the financial institutions and banks are
encouraged to follow certain principles in respect of CSR
 Commitment to sustainability

 Commitment to ‘Do No Harm

 Commitment to Responsibility

 Commitment to Transparency

 Commitment to Accountability

 Commitment to good governance

 Corporate governance in banking System

The objectives of corporate governance would cover:

 To protect and enhance shareholder value

 To protect the interest of all other stakeholders such as customers,

employees and society at large

 To ensure transparency and integrity in communication and to make

available full, accurate and clear information to all concerned

 To ensure accountability for performance and customer service and

to achieve excellence at all levels

 Thank you