Ethical & Unethical issues in disciplines of Finance

Business Ethics In Finance

Ethics in general is concerned with human behavior that is acceptable or "right" and that is not acceptable or "wrong" based on conventional morality. General ethical norms encompass truthfulness, honesty, integrity, respect for others, fairness, and justice. They relate to all aspects of life, including business and finance. Financial ethics is, therefore, a subset of general ethics. "Finance has always been the life - blood of business, no business can survive without finance.But there are evidences available to believe that at times business managers opt for unethical practices to run business to serve their vested interest and in turn cause harm to their stakeholder.

• It is to be considered important as without financial component no business can run for a long time.
• Ethics in finance may vary from industry to industry but everyone is liable to do their work at utmost good faith 

Why  is it important to worry about ethics in finance?

• When you think about it you realize that you put your hard-earned savings in the care of financial firms assets manager ,banks,insurance,and all kinds of funds and your trust them to look after the money.
• you want the best result but there is a balance between risk and rewards ,
• you need to feel confident that you can trust the finance professionals to act with integrity in your interest.

Examples of unethical temptation:-

• Make exaggerated claims to counter exaggerated claims of competitor. 
• offer a customer a unauthorized "gift" in return for their business.
• conceal information from a customer in order to get their business and to meet your sales goals.
• Put non business related expenses on your expense account.
•  Divulging confidential information about one customer to another in order to facilitates a sale.

Why are ethics important in the finance industry?

The stock market scam of 1992 is considered one of the worst violations of ethics in the Indian financial industry. Retail investors lost money after the market was manipulated, and it subsequently lost 72 percent of its value. Despite serious consequences and convictions, a similar fraud in which bank and promoter funds were used to manipulate stock prices took place within a decade. At a global level, the financial crisis of 2008 pushed the boundaries of unethical practices with housing loans given to subprime investors. Its effects continue to be felt across the world even after a decade. Economic activity has not yet returned to trend in most countries and public debt in advanced economies has risen by more than 30 percentage points of GDP. Still, accounting frauds and market manipulations,schemes, insider-trading, and other misdeeds continue to shatter investor confidence.

      There are many reasons why ethical violations occur. Sometimes they become the norm because“everyone is doing it.” Others happen when individuals take advantage of loopholes in the system. Ultimately violations are driven by the potential personal gain of the investment professional.Investors intrinsically trust financial institutions with their money and expect them to invest it with integrity. All market risks considered, investors expect the highest return and put their faith in the hands of professionals. Upholding investor confidence is vital to the success of the investment industry. High ethical standards are critical to maintaining the public’s trust in financial markets and in the investment profession.

2019 RBI caught financial unethical fraud in banks:-

 Indian banking system detected Rs 71,500 crore   worth of frauds in financial year 2018-19 which to   put in scale is slightly more than the Rs 71,000   crore recapitalization package planned by the   government to revive the health of its public-         sector banks.

Interestingly, over 90 percent of these losses were to the government owned banks while the      share of incidents that emanated from these lenders was at 55.4 percent.Overall, 3,766 incidents of frauds were detected in FY19, a 15 p ..percent spike from a year ago, while the losses incurred saw an 80 percent rise from the last year, even as FY18 saw the most infamous banking fraud in India’s history where Nirav Modi siphoned off nearly Rs 13,000 crores from Punjab National Bank in February 2018.

                     “In terms of area of operations, frauds related to advances constituted the preponderant share of the total amount involved in frauds in 2018-19, while the share of frauds in off-balance sheet items declined from a year ago,” 

According to RBI’s annual report released on Thursday. “Frauds relating to card/internet and deposits constituted only 0.3 per cent of the total value of frauds in 2018-19.”Most of these frauds were because cheating and forgery, followed by misappropriation & criminal breach of trust, RBI said. Small frauds less than Rs.1 lakh were just 0.1 percent of the amounts involved.
"To curb this menace," the central bank said that it is in talks with various agencies including the Ministry of Corporate Affairs to create an interlinked database for fraud monitoring. In furtherance, the regulators said that analytic engines of banks and user interface of fraud registry would be improved to create a more robust monitoring system.

The RBI, in the report, said that they also subjected 57 banks through IT examination to check their cyber security preparedness and compliances. 

According to me , after analyzing above cases ethical guidelines should be followed by everyone , to maintain our business goodwill as well as a social responsibilities. If we will be the culprits ,by knowing what is right or wrong, then some how our society will be affected which is a great concern to be looked after ,then!!

I, hope this was very helpful for you if you want more blogs like these please comment and share .

Thank you !!

Ethical & Unethical issues in disciplines of Marketing

I kunwar deep singh gladden to write my another blog on an important aspect of society that is "Ethics".

                          Ethical Marketing

INTRO:-   First of all,  we should know the meaning of "Ethics"-a Greek word "ethike"  which means the standardized rules that a social system provide.Ethical marketing is about making marketing decisions that are morally right. The morality of the marketing decision can encompass any part of marketing including sourcing of raw materials, staff employment and product advertising and pricing. Each person's view of morality is different, it is based on personal values and experiences. This creates a challenge for companies who want to pursue ethical marketing in a manner that will appeal to their target market.

Why Do Businesses Adopt Ethical Marketing?

Some businesses are set up because the founders feel strongly about an issue and they would like to deal with issue through the business. Whilst other businesses pursue ethical marketing because they feel that is what customers expect from them.

Some consumers buy products and services ,because they feel that the products are based on ethical strategy they agree with. In response to this consumer demand organisations have increased their focus on ethical marketing. The UK Co-operative bank is good example of an organisation which endeavors to adopt ethical principles.

The importance of ethics in business the importance of ethics in business ?

Ethical behaviour and corporate social responsibility can bring significant benefits to a business. For example, they may:

• Attract customers to the firm’s products, thereby boosting sales and profits.

  
• make employees want to stay with the business, reduce labour turnover and therefore increase productivity.
• attract more employees wanting to work for the business, reduce recruitment costs and enable the company to get the most talented employees
• attract investors and keep the company’s share price high, thereby protecting the business from takeover.

Unethical practices a business must avoid for its long run and social benefits are :-

• Exploiting workers.
• Over-billing customers.                                                        
• Exploiting tax loopholes.                          
• Dumping toxins into the air or water.                   
• Prescribing unnecessary medical procedures.
• Covering up car defects.
• Designing phones so that users accidentally accept data charges.
• Creating fake identities.

An Ethical Corporate(illustrated with an example)

Tata Steel:-Global leader in maintaing the standards of Ethical Business Practices .

                                "A man without ethics is a wild beast loosed upon this world".

We humans are very good in criticizing others, those who are not doing right things, but rarely appreciate the one who is doing things in a right manner. 

Same is with ethical issues in companies, if a company is performing unethical practices we criticise it at a peak and remember them for their unethical practices but what about those companies who are performing ethical practices, do we know the names of those ethical companies who performing in a right manners by doing right things? 

 So, let's discuss about some global leaders of ethical business. 

Nowadays, it is very important for the companies to perform in an ethical way to maintain their brand value in the society.

Doing ethical practices leads to achieve all the objectives of the company i.e. organisational,personal and social objectives also.

 There are many companies those are doing unethical practices to increase their revenues, but this is not the only way to do that. There are also some companies those are doing ethical practices and not only increased their revenues but also brand value in the market and became a trustworthy Company because of their ethical behavior.

One of those ethical companies is Tata Steel

Tata Iron and Steel Company Limited(TISCO), is an Indian multinational steel-making company headquartered in kolkata, West Bengal, India.

• It is well known for doing ethical practices and has been recognized as one of the 2019 World's Most Ethical Companies by the Ethisphere Institute, a global leader in defining and advancing  the standards of ethical business practices.

The company has received the recognition for the eighth time in the 'Metals,Minerals and Mining' category.

The company always continue to improve communities,building capable and empowered workforce.The Tata name evokes a sense of Trust,  Credibility and Integrity to many millions of stakeholders in India and overseas.

All these above practices makes a company an ethical company in all prospective.

Being ethical to the society and to the stakeholders increase the efficiency of the company.Ethical practices should not only done inside the company,  but also outside the company with society. This would increase the revenue of company and the company would perform more effectively for a long period of time. And there are many companies those are doing well for being ethical such as:

1.Canon

2.Dell

3.H&M

4. Wipro

And more companies are there in the list those are performing ethically. All these companies respect the rights of all its stakeholders and create overall value for society.

It is great to know that there also many companies those are reinforcing ethical culture and looking forward to an equally aligned work culture with all stakeholders, internal or external without any discrimination.

At last I would say that we should appreciate the companies for their ethical practices and should keep recognizing them for their work and ethical behavior towards  the society.

Thank you!! 

Ethical & Unethical issues in disciplines of Human Resource Management

Human Resource Management:-

"Human resource management deals with the aspect of manpower in the organisation, it is process of recruiting, hiring, deploying and managing the employees of the organisation."

•  A company's Human Resource(HR) department is responsible to manage the employees of the organisation and to make sure the manpower of the organisation is up to the required standard so that the organisation can perform their daily operations smoothly. 

Ethical and Unethical issues in Human Resource Management.

1. Employment Issues:

Major Challenges are in the areas of hiring employees.

• To deal with pressure of hiring a relative or friend.
• False information in the case of employee qualification.
• Finding out that the employee who is skilled lied about educational qualification.

2. Cash and incentive plans:

  Major issues include basic salaries and incentives.

•  HR manager has to choose between higher level of basic salaries and higher level of percentage increase in salaries to attract employees towards the organisation.
• Sometimes executives with special privilege and rights in the organisation, suppose a CEO of a company which is not doing well in the market buys Mercedes which results in an unethical burden which falls on the HR managers.

3. Working Condition:

                 "Issues related to working environment of the organisation."

• HRM must ensure the safety standard and procedures before deploying employees in the organisation.
• Employees has right to demand a workplace which is free of sexual abuse and discrimination and also a proper entrance for disabled employees so that they can                                                                                      enter  and exit the building comfortably.

4. Safety and Health:

                                              "Issues related to industrial workplace."

• Sometimes industrial work is hazardous to the health of the employees.
• Certain safety standards has to be maintained in the industry for the employees, which will eventually result  in decrease in the expenses in the areas of health insurance.

5. Abusive Behavior:-

•   Some employees gets offended by the manager ,some fellow worker,or stress due to work load he/she gets in 889+abusive conversation with others due to pressure .HR manger should control such kind behaviour of the employee which should not affect other employees.

6. Employee theft:-

• It was founded that some of the employees working in the company were stealing and were caught .This kind of behaviour and actions of employees are very serious and harmful for the organisation.

7. Breaching Company Internet Policy:

According to some researchers they have founded that huge amount of money is wasted on unwanted internet surfing. Due this money and company time both are wasted . HR managers should look up to their employees that where the are spending companies resources.