JAIIB PPB Paper-2 Module-D Unit 1-Ethics, Business Ethics & Banking: An Integrated Perspective:

09/04/2023

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JAIIB Paper 2 (PPB) Module D Unit 1- Ethics, Business Ethics & Banking: An Integrated Perspective (New Syllabus)

The IIBF has recently announced updates to the JAIIB Exam 2023, including changes to the syllabus and exam format. Candidates will now be required to complete four papers, with Paper 2 (Principles & Practices of Banking) covering Unit 1 Ethics, Business Ethics & Banking: An Integrated Perspective. This unit is particularly crucial for candidates, as it will significantly impact their performance in the exam.

To assist candidates in understanding the topic, we will provide all the necessary details related to Unit 1: Ethics, Business Ethics & Banking: An Integrated Perspective of JAIIB Paper 2 (PPB) Module C: Ethics in Banks and Financial Institutions. We strongly recommend that candidates refer to this article and utilize our Online Mock Test Series to enhance their understanding of Foreign Currency Accounts for Residents and other related aspects.

Candidates must comprehend each unit in the syllabus, including the Marketing unit, to excel in the JAIIB Certification Examination 2023 and establish a successful career in the banking sector. This unit is of great importance in the banking industry, and candidates must prepare thoroughly.

Ethics and Business values: Myth and Reality

Business Value

Business value are an informal term and it explains the core principles or standards that guide the way business is done. Values sum up what your business stands for and what makes it special.

Business ethics

Established principle and standard that guide behaviour in the world of business.

Different Between Business Ethics and Business Values

Business Ethics	Business Values
Ethics refers to the guidelines for conduct, that address questions about morality	Value is defined as the principles and ideals, which help them in making judgment of what is more important.
Moral Principle system	Induces thinking
What is morally or incorrect in the given situation?	What we want to be or achieve?
Magnitude of rightness or wrongness of one’s options.	It explains the level of significance.

Myths vs Reality

Myth No. 1: Entrepreneurs are Essentially Inventors

Many aspirations die in the bud due to the existence of this perceived prerequisite. Entrepreneurship is often confused with the invention, where it’s taken as a condition to be able to tangibly invent an app, system, product or a new equation in order to create market value. For example, the way Ola/Uber disrupted travel and Airbnb/Oyo Rooms disrupted hotel stays.

Reality: Entrepreneurs are Ideators

Entrepreneurship is a phenomenal journey which is flagged off with something as basic and simple as an idea. Entrepreneurs arise from an existing gap, and the right idea to fill that gap. Once the idea stands out as disruptive, innovation and invention automatically fall in line. Work it up to the top before someone else works on it to build an empire.

Myth No. 2: Entrepreneurs are Mainly Motivated by Money

While money is the big game, it definitely isn’t the end game. Money making makes for a very narrow viewpoint for those who certainly wish to establish a business. There are a larger passion and a bigger purpose that every budding entrepreneur holds or must hold onto than just making big bucks.

Reality: Entrepreneurs are Motivated by Passion

Most entrepreneurs believe in taking a risk and living life on the edge. They carry small phones but wider visions, live on bare necessities but live for huger possibilities. For any new business, the first few years are all about reaching a breakeven, profits become a part once execution is patiently handled and aimed for. Passion is the biggest motivation.

Myth No. 3: Entrepreneurs Have to be Risk-takers

A myth almost ingrained in the market almost believed to be a fact. Risk taking is more of an attitude when it comes to entrepreneurship. In the sea of bigger things, risk-taking is only one of the sailing boats. Very often many fierce risk takers fail due to the lack of ability to be risk avengers or that of being on the safe side of the spectrum at all times.

Reality: Entrepreneurs Have to be Challenge-takers

As an entrepreneur, all you need to be is a relentless challenger, which encompasses taking risks as well as avoiding them. To pose your idea as the distinguisher, all that you need is the attitude of a go-getter. The always prepared to face the adversity attitude should always come in play while facing obstacles, financial ups-downs and severe, cut-throat competition. Nothing is as strong as a strong will.

Myth No. 4: Entrepreneurs are Born

Where do we think they plan for the idea, while they develop in the womb? This is one of the biggest scandals of a myth, which makes thousands of people miss the chance of being the next big entrepreneur. Intelligence, high scores, family blood, none of these actually guarantees your ticket to the top.

Reality: Entrepreneurs are Made

Nothing begets dedication, will-power and courage. You aren’t born an entrepreneur, you become one. The greatest entrepreneurs come from very average set-ups with almost no fortune in the bloodline. There will never be a shortcut to Hard work.

Business Ethics

Ethics means the set of rules or principles that the organization should follow. While in business ethics refers to a code of conduct that businesses are expected to follow while doing business.
Through ethics, a standard is set for the organization to regulate their behavior. This helps them in distinguishing between the wrong and the right part of the businesses.
Business ethics compromises of all these values and principles and helps in guiding the behavior in the organizations. Businesses should have a balance between the needs of the stakeholders and their desire to make profits.
While maintaining these balances, many times businesses require to do tradeoffs. To combat such scenarios, rules and principles are formed in the organization.
This ensures that businesses gain money without affecting the individuals or society as a whole. The ethics involved in the businesses reflect the philosophy of that organization.

Principles of Business Ethics

Integrity

Whenever there is great pressure to do right instead of maximizing profits, this principle is tested. The executives need to demonstrate courage and personal integrity, by doing what-what think is right.
These are the principles, which are upright, honorable. They need to fight for their beliefs. For these principles, they will not back down and be hypocritical or experience.

Loyalty

No ethical behavior can be promoted without trust. And for trust, loyalty needs to be demonstrated. The executives need to be worthy of this trust while remaining loyal to the institutions and the person. There should be friendship in the time of adversity and support and devotion for the duty.

Honesty

The ethical executives are honest while dealing with their regular work. They also need to be truthful and do not deliberately deceive or mislead the information to others. There should be an avoidance of the partial truths, overstatements, misrepresentations, etc. Thus, they should not have selective omission by any means possible.

Respect and Concern

These are two necessarily different forms of behavior in the organization. But they go in tandem that is why they have been put under one principle. When the executive is ethical he is compassionate, kind, and caring.

Fairness

The executives need not be just fair in all the dealings, but they also should not exercise the wrong use of their power. They should not try to use over each or other indecent manners to gain any sort of advantage. Also, they should not take undue advantage of anything or other people’s mistakes.

Leadership

Any executive, if ethical, should be a leader to others. They should be able to handle the responsibilities. They should be aware of the opportunities due to their position. The executives need to be a proper role model for others.

Ethical Foundation of Banking: Finance Depends on Trust

Need and Important of Ethics in Banking

Bank need to deliver high quality services to its customers, which are driven by high ethical standards and therefore maintain the same in its work culture, management and also with the quality of its employees. Banks can only work well when the public trust them. Warranting safety of banking activities is certainly a challenging task. It depends heavily both on the economic condition of the country and in the environment of an open economy, the tendencies of development of countries worldwide as well.

Ethics help in dealing with dilemmas

Any banking business however well-placed, at times, it may have to confront moral dilemmas in their regular course of business. Banks have to deal with complex dilemmas in decision making, which is not about distinguishing between right and wrong, but between right versus less right. This, a Bank needs to adhere to a set of strong moral principles, which helps its employees in navigating through the obstacle of ethical choice, while making important decision.

Guards Reputation/ Goodwill

This is a two-pronged process, First, bank’s ethical practices aid in safeguarding depositor’s interest, thus, maintaining the stability of the system and preserving the reputation of the bank.
Second, Employees adhering to ethical practices prevent the breaches of law and corrupt activities. Besides this, it will also protect stakeholder’s interest and enhance the bank’s competitiveness and brand image.

Helps avoid risk

A well- defined code of ethics following by the superiors will ensure that the bank at all times maintain high ethical standards and have preventive and corrective measures against unethical practices by any of the staff members.

Principles of ethical banking

Banks are dependent on people to carry out its business who are reflection of the ethical standards of follows. Therefore, it is important for banking professionals to know what is expected from them and also help them to avoid temptations and pressures. Principles of ethics in banking business provide a guideline to the banking professional, which helps them in dealing with ethical issue.

Principle of trust- Trust is the confidence in quality or attribute of a person or a thing. It also includes truth of a statement. It includes both trustfulness and trustworthiness. In business, trust always means trustworthiness- which is established by trustfulness. It inspires customers, investors, regulators and lenders to feel confident in an individual, a product or an organization.

The other standard banking code of conduct includes-

Integrity
Neutrality
Reliability
Transparency

Ethical Foundation of Being a professional

Professionals must possess knowledge of law and comply with all applicable laws and regulations of the government, even in the event of conflict. Professionals should disassociate themselves from violation of laws or rules and regulations.
Professionals must take reasonable care and judgment in maintaining their independence and objectivity in their activities. Accepting gift, benefits, compensation etc.
Professional must not engage in any conduct of dishonesty, deceit, fraud, or an action, which might affect their reputation and integrity.

Professionalism in Banking

The image and reputation of a bank as well as people’s confidence in a bank depends heavily on the behaviour of its employees, their ability to interact and show attention to their co-workers and clients.

JAIIB PPB Module D Unit 1 Ethics, Business Ethics & Banking An Integrated Perspective (Ambitious Baba) PDF