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JAIIB – BUSINESS ETHICS | LEGAL & REGULATORY ASPECTS OF BANKING | LATEST CLASSES 2022

JAIIB LRAB – BUSINESS ETHICS 

We will discuss the BUSINESS ETHICS in this post from the Syllabus of JAIIB 2022 Exams for LRAB i.e. paper 3 & the Law Video classes.

Module E of the LRAB paper of Junior Associate of the Indian Institute of Bankers Exam is one good topic & could be a scoring module if you know what to focus & what you could do without. (well… for the cases where JAIIB candidates have limited time left for preparation of LRAB or other subjects of this IIBF Exam).

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So, we will discuss or more along the lines of introduce the concept of ‘Ethics’ as per the given Module – Ethics in Banks and Financial Institutions from the prescribed JAIIB Syllabus latest for the upcoming Nov 2022 Exams & then we will tell you about the iibf video classes that are available if you surely want to pass JAIIB right this year!

So, let us begin with ethics so that we can quickly move to the LRAB Study material part.

 

What exactly are Business Ethics?

Business ethics is a form of applied ethics or professional ethics that examines ethical principles and moral or ethical issues that may arise in a business environment in all aspects of business behavior and is relevant to the actions of individuals and entire organizations.

They basically define the behavior of employees in their interactions with each other and with outsiders & the company’s values ​​and role in society. 

Example: 

  • A company may discourage reporting’s from those having romantic relationships with each other to prevent favoritism during quarterly reviews. 
  • It may also choose to pay its workers a high minimum wage or implement environmentally friendly practices in its facilities to minimize environmental damage caused by production processes. 
  • An employee (owns shares in the company) who is told in a meeting that the company will face a revenue shortfall for the quarter. It would be unethical for employees to sell their shares because they would be subject to insider information.

 

The application of ethics in business situations has existed since ancient times. However, it only became an important field of study in the 1970s when modern corporations had their principles of business ethics designed to achieve 2 goals: 

  • to reconcile their role as public citizens and 
  • to fulfill their business requirement to produce goods and profits. 

 

DETERMINING WHAT IS RIGHT AND WHAT IS WRONG:

Acting ethically ultimately means determining what is right and what is wrong. All over the world there are basic standards that dictate what is unethical when it comes to business practices.

For example:

Unsafe working conditions are generally considered unethical because they endanger workers. 

Even though some unethical business practices are obvious or true for companies around the world, they still occur. Determining what practices are ethical or not is more difficult to determine if they exist in a gray area where the lines between ethical and unethical can blur.

Suppose Company ‘Azara’ works with Rahul, a contact at Company ‘Bazaar’, who is the individual through whom they negotiate all prices for the supplies they purchase from Company Bazaar. Naturally, Company Azara wants to get the best prices for supplies. When Rahul comes to their home office to negotiate a new contract, they put him up in a first-class hotel in the best suite and make sure his every want and need is met.

Technically, this practice is not illegal. However, this could be considered a gray area – close to, but not quite, bribery – as the individual is likely to be more inclined to give Company Azara – a price discount at the expense of getting the best deal for their own company.

Understanding business ethics in 3 parts:

To really break down business ethics, it’s better to understand the 2 basic components:

  1. History: While the idea of ​​business ethics arose together with the creation of the first company, its recent history since the beginning of the 1970s.

The main principles of business ethics are based on academia and academic writings on proper business operations i.e. basic ethical practices have actually been acquired through research & practical study of how businesses should operate, both independently and with each other.

  1. Scandals: The second main meaning of the term has been derived from its close association with scandals. Example: Companies that were selling goods using child labor or poor working conditions.
  2. Integration: Perhaps the most recent and ever-evolving aspect of ethics is the 3rd part i.e. the idea that companies build business ethics into the core of their companies, making it a standard part of their operating plan. As the world becomes more political & more politically correct, there has been an increased focus on strong adherence to proper business ethics.


 

Why business ethics are important?

Business ethics are important because they have lasting consequences on several levels. With increased investor awareness of environmental, social and governance issues, company reputations are at stake. 

For example: 

If a company engages in unethical practices such as poor practices and customer privacy practices, it could lead to a data breach. This can subsequently lead to a significant loss of customers, less competitive edge, erosion of trust, and a drop in share prices.

The importance of business ethics is also evident in business operations. Business ethics guide the organization in these operations and keep them in compliance with laws and regulations & help the business maintain a positive public image and reputation for respectability.

Businesses with good ethics attract the best talent. Business ethics lays the foundations for proper Human Resource Management. In addition, providing excellent employee well-being improves employee productivity and encourages them to remain loyal to the company’s vision for the long term.

Business ethics are also important in building relationships between a company and its customers. A business with a defined and transparent operating system that treats its customers well will usually develop a long-term relationship with customers. This makes easier for customers to trust the businesses and their products / services.

Business ethics also help maintain a company’s reputation among investors who seek transparency in a company’s actions. In other words, they want to know exactly what their money is being used for.

 

WHAT ARE THE PRINCIPLES OF BUSINESS ETHICS?

Below are the principles of business ethics that generally govern the company’s code of conduct. 

  • Accountability:

Accountability means that businesses take full responsibility for their actions or practices i.e including any bad decisions or unethical business practices used in the course of business operations.

  • Care and respect:

Mutual respect must be maintained among owners of business, employees and customers to provide a safe workplace for employees and promote respectful relationships between all stakeholders.

  • Sincerity:

Transparent communication between business owners and employees is highly desirable. This feature helps build trust and establish a relationship between employees and the company. Transparency also applies to business relations with its customers.

  • Healthy competition:

Businesses should promote healthy competition among employees and reduce conflicts of interest among employees to a minimum.

  • Loyalty and respect for commitments:

All disagreements between businesses and their employees should be resolved internally out of public view. Businesses that unreasonably interpret agreements or fail to honor commitments are considered unethical in business practice.

  • Information:

Important information disseminated between customers, employees or business partners must be provided comprehensively. This includes both positive and negative information, conditions or any other material information, & withholding or concealing relevant facts is against business ethics.

  • Respect for Law & Order:

Laws, rules and regulations governing the businesses must be respected and followed & any violation of such law is considered to be unethical.

 

You can find more of such articles on LRAB & other papers of JAIIB on our website.

 

LATEST LRAB CLASSES | PASS JAIIB IN FIRST ATTEMPT

As the syllabus for JAIIB will change after the 2022 attempt, this might be the last chance for bankers who registered themselves in the previous attempts & have their credits on roll.

So, better join Learning Sessions right now to pass the Legal & Regulatory Aspects of Banking Paper or other papers of JAIIB!

You need to download/visit & enroll right away to achieve the success:

 

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To get offers on the JAIIB, CAIIB or other IIBF Certification Exams or Bank Promotion Exams, you can talk to us on our WhatsApp No.: 8360944207

 

 

All the Best for your Exams!

Team: Learning Sessions

 

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