Maintaining ethics in banking
Friday, 6 January 2012
Atiur Rahman
The annual lecture event commemorating Nurul Matin, one of the helmsmen of our central bank and the banking sector in the early years after liberation, has been very purposeful. To this day the banking community in Bangladesh values highly his impeccably exemplary personal and professional integrity as guiding beacons in pursuit of excellence in ethical banking now and in days to come. This annual lecture event is intended to keep ethical imperatives in forefront of personal ethos of bankers and their institutional goals, objectives and strategies. The Bangladesh Institute of Bank Management (BIBM) has been playing its leading role in carrying forward this annual lecture series as a part of our banking community's tradition.
While delivering the eleventh Nurul Matin Lecture on banking ethics, Professor A.B.M. Mirza Md. Azizul Islam began his valuable address pleading only peripheral familiarity with literature on ethics and professing an inclination towards the rather limited utilitarian view of ethics; but his intuitions and innate wisdom tempered by the rich trove of his real world experience in national and international civil service (including cabinet level experience steering the Bangladesh economy) has led him unerringly to recommending ethical conduct going well beyond utility maximisation into the Rawlsian concerns for justice and fairness in public life, developed further by A. K. Sen, the Nobel Laureate economist and globally acclaimed thinker born in Bangladesh.
In his lecture Professor Mirza Azizul Islam has provided us with succinct overviews of the traditional and newer dimensions of banking activities, and of the importance of ethical conduct in these activities so as to preserve the trust and reliance reposed on banks by depositors and others engaged in diverse pursuits in the real economy. He has illustrated the threats from breach of this trust citing recent episodes of unethical greed driven role of bankers precipitating institutional and market collapses, at times even triggering instability on global scale.
Based on these discussions, Professor Azizul Islam has identified four pillars of ethics in banking and further to a comprehensive set of dos and donts defining borders of ethical propriety in banking. The pillars include the obvious requisite of honest institutional behaviour with regulatory compliance in true spirit, full truthful transparent financial disclosures depicting the status of institutional soundness and solvency, fair and equitable treatment of all stakeholders and socially responsible behaviour as corporate citizens. This last onus of socially responsible behaviour goes beyond utility maximisation, resonating with the urge for justice and fairness in social life and promoting inclusive growth to open up advancement opportunities for the disadvantaged population segments.
The ongoing financial inclusion initiative in our banking sector is an action agenda driven by this ethical imperative, underpinned by the Bangladesh Bank (BB) guidance for mainstreaming corporate social responsibility (CSR) in corporate goals, objectives and ethos of banks. We are heartened by the warmth of enthusiasm thus far seen in all banks (including the private sector-owned ones) in these initiatives, but we still have a long distance to cover in completely ridding our society of poverty and deprivation arising from manifest injustice and unfairness.
Banks are financiers and financial service-providers to real sector businesses; this places them in an excellent position to be standard-setters of ethical practices in real sector businesses, by asking for the same high ethical standards in the borrower businesses that they pursue in their own banks. This means that banks can assume the role of vanguards and standard-bearers of ethical practices in the entire business world.
The BB would urge and support proactivity of our banking community in doing away with any remaining laxity and ethical lapses in policies and practices of individual banks; collectively pursuing ever better heights of ethical rectitude.
We would look forward to the BIBM and individual banks holding periodical discussion sessions for brainstorming on various issues in banking ethics. Training courses for new employees and existing staff of banks should have sessions with adequate content on ethical issues. The BB will be happy to be companion and partner of our banking community in the way forward to heights of ethical excellence; and contributions of high profile scholars and thought leaders. This will hugely benefit us in this journey now and in future.
This is an edited version of a
presentation made by Dr. Atiur Rahman, Governor of Bangladesh Bank as the Chief Guest at "Eleventh Nurul Matin Memorial Lecture on Ethics in Banking", organised by Bangladesh Institute of Bank Management last Wednesday at Hotel Ruposhi Bangla, Dhaka
The annual lecture event commemorating Nurul Matin, one of the helmsmen of our central bank and the banking sector in the early years after liberation, has been very purposeful. To this day the banking community in Bangladesh values highly his impeccably exemplary personal and professional integrity as guiding beacons in pursuit of excellence in ethical banking now and in days to come. This annual lecture event is intended to keep ethical imperatives in forefront of personal ethos of bankers and their institutional goals, objectives and strategies. The Bangladesh Institute of Bank Management (BIBM) has been playing its leading role in carrying forward this annual lecture series as a part of our banking community's tradition.
While delivering the eleventh Nurul Matin Lecture on banking ethics, Professor A.B.M. Mirza Md. Azizul Islam began his valuable address pleading only peripheral familiarity with literature on ethics and professing an inclination towards the rather limited utilitarian view of ethics; but his intuitions and innate wisdom tempered by the rich trove of his real world experience in national and international civil service (including cabinet level experience steering the Bangladesh economy) has led him unerringly to recommending ethical conduct going well beyond utility maximisation into the Rawlsian concerns for justice and fairness in public life, developed further by A. K. Sen, the Nobel Laureate economist and globally acclaimed thinker born in Bangladesh.
In his lecture Professor Mirza Azizul Islam has provided us with succinct overviews of the traditional and newer dimensions of banking activities, and of the importance of ethical conduct in these activities so as to preserve the trust and reliance reposed on banks by depositors and others engaged in diverse pursuits in the real economy. He has illustrated the threats from breach of this trust citing recent episodes of unethical greed driven role of bankers precipitating institutional and market collapses, at times even triggering instability on global scale.
Based on these discussions, Professor Azizul Islam has identified four pillars of ethics in banking and further to a comprehensive set of dos and donts defining borders of ethical propriety in banking. The pillars include the obvious requisite of honest institutional behaviour with regulatory compliance in true spirit, full truthful transparent financial disclosures depicting the status of institutional soundness and solvency, fair and equitable treatment of all stakeholders and socially responsible behaviour as corporate citizens. This last onus of socially responsible behaviour goes beyond utility maximisation, resonating with the urge for justice and fairness in social life and promoting inclusive growth to open up advancement opportunities for the disadvantaged population segments.
The ongoing financial inclusion initiative in our banking sector is an action agenda driven by this ethical imperative, underpinned by the Bangladesh Bank (BB) guidance for mainstreaming corporate social responsibility (CSR) in corporate goals, objectives and ethos of banks. We are heartened by the warmth of enthusiasm thus far seen in all banks (including the private sector-owned ones) in these initiatives, but we still have a long distance to cover in completely ridding our society of poverty and deprivation arising from manifest injustice and unfairness.
Banks are financiers and financial service-providers to real sector businesses; this places them in an excellent position to be standard-setters of ethical practices in real sector businesses, by asking for the same high ethical standards in the borrower businesses that they pursue in their own banks. This means that banks can assume the role of vanguards and standard-bearers of ethical practices in the entire business world.
The BB would urge and support proactivity of our banking community in doing away with any remaining laxity and ethical lapses in policies and practices of individual banks; collectively pursuing ever better heights of ethical rectitude.
We would look forward to the BIBM and individual banks holding periodical discussion sessions for brainstorming on various issues in banking ethics. Training courses for new employees and existing staff of banks should have sessions with adequate content on ethical issues. The BB will be happy to be companion and partner of our banking community in the way forward to heights of ethical excellence; and contributions of high profile scholars and thought leaders. This will hugely benefit us in this journey now and in future.
This is an edited version of a
presentation made by Dr. Atiur Rahman, Governor of Bangladesh Bank as the Chief Guest at "Eleventh Nurul Matin Memorial Lecture on Ethics in Banking", organised by Bangladesh Institute of Bank Management last Wednesday at Hotel Ruposhi Bangla, Dhaka