Ethical Dimensions: Employees | PAPER II – PRINCIPLES & PRACTICES OF BANKING | MODULE D: ETHICS IN BANKS AND FINANCIAL INSTITUTIONS

Ethical Dimensions: Employees

---

1. Abuse of Official Position

Employees must not misuse their official position for personal gains. This includes insider trading, leaking proprietary data, or accepting bribes.

Example: A bank officer using non-public financial reports to advise friends on stock trades is engaging in insider trading.

2. Insider Trading

Insider trading refers to using confidential company information for trading securities. It is unethical and illegal.

Example: Knowing about a pending acquisition and buying stocks beforehand.

3. Proprietary Data

Bank employees have access to proprietary data and must maintain its confidentiality.

Example: Sharing client loan application data with competitors.

4. Bribes and Corruption

Accepting or offering bribes to influence decisions is unethical and criminal.

Example: A loan officer approving a loan in return for cash or gifts.

5. Obligations to Third Parties

Employees must honor obligations to customers, regulators, and society, and not act in ways that cause reputational risk to the organization.

6. Job Discrimination

Discrimination on the basis of gender, caste, religion, or disability is unethical and against employment laws.

7. Sexual Harassment

Sexual harassment includes unwanted advances or verbal/physical conduct of a sexual nature. A safe workplace must be ensured.

8. Managing Conflict of Interest

Conflicts arise when personal interests interfere with professional duties. Disclosure and transparency are essential.

Illustration: If a bank manager’s spouse applies for a business loan, it should be handled by another officer.

9. Fair Accounting Practices

Accounting should reflect true financial status without manipulation. Related party transactions should be transparently disclosed.

Example: Hiding liabilities in subsidiary accounts is unethical and a violation of accounting standards.

Math Illustration:

      Suppose: Actual Expense = ₹2,00,000
      Reported Expense = ₹1,20,000
      Misreported Amount = ₹2,00,000 - ₹1,20,000 = ₹80,000 (understated)
    

10. HRM Ethics

HRM ethics focus on fair recruitment, merit-based promotions, unbiased evaluations, and equal opportunities.

11. Principles of Representation and Work Environment

Employees should be represented fairly and workplaces should foster mutual respect, safety, and inclusion.

12. Employees as Ethics Ambassadors

Employees must uphold and promote organizational values and ethical behavior among peers and clients.

13. Managers as Ethical Leaders

Managers must lead by example, enforce ethical policies, and build a culture of integrity.

MCQs

1. What is insider trading?
A) Sharing public information
B) Trading based on media reports
C) Trading using non-public information
D) None of the above
Answer: C

2. Which of the following is an example of job discrimination?
A) Merit-based hiring
B) Promoting based on performance
C) Rejecting a candidate due to religion
D) Equal pay for equal work
Answer: C

3. What does a conflict of interest involve?
A) Following company rules
B) Personal interests affecting job decisions
C) Corporate governance
D) Financial literacy
Answer: B

4. Fair accounting practices include:
A) Manipulating data
B) Hiding related transactions
C) Transparent financial reporting
D) False reporting to show profit
Answer: C

5. HRM ethics do NOT include:
A) Favoritism
B) Equal opportunity
C) Merit-based promotions
D) Transparent recruitment
Answer: A

6. Ethical leaders should:
A) Ignore team misconduct
B) Promote unethical gains
C) Lead by example
D) Hide issues
Answer: C

7. Which is a form of workplace harassment?
A) Giving assignments
B) Constructive feedback
C) Unwanted sexual advances
D) Promoting talent
Answer: C

8. Bribery in banks affects:
A) Transparency
B) Trust
C) Fair decision making
D) All of the above
Answer: D

9. Employees as ethics ambassadors should:
A) Mislead customers
B) Promote corruption
C) Uphold values
D) Stay silent on issues
Answer: C

10. Related party transactions should be:
A) Hidden
B) Ignored
C) Disclosed transparently
D) Not recorded
Answer: C