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Former adviser suggests banks1 code of conduct

Star Business Report
Pointing his finger at gaps in regulatory enforcement that vitiates ethical climate in banks, a former government functionary has suggested that these financial institutions formulate a comprehensive code of conduct.
In a memorial lecture in Dhaka yesterday, Akbar zMi Khan said insider lending, political patronage, swindles, frauds and corruption in banks have resulted from governance deficits and dysfunctional legal system.
"Ethical practices in banks should get a central seat because financial crisis has intensified in recent days," the former finance adviser to a caretaker government told the ninth Nurul Matin Memorial Lecture on Ethics in Banking.
Bangladesh Institute of Bank Management organised it Dhaka Sheraton Hotel.
Tightening rules on qualifications of directors to bar partisan people from getting into any bank board, regular publications of CAMEL ratings by Bangladesh Bank the country's central bank -, exemplars' punishment for financial swindles and wilful
large loan defaults were some other suggestions put forward by Khan at the programme.
"With recurrent greed-fuelled implosions like systemic crises as well as runs in banks and non-bank institutions and sordid corporate scandals, ethics in banking today is not merely an abstract idea," he said.
Finance Minister AMA Muhith was also present at the lecture chaired by Bangladesh Bank Governor Dr Atiur Rahman.
The minister was however upbeat on banks' performances, admitting to some shortcomings in the financial sector.
Poor qualification of directors along with poor auditing practices also undermines the ethical practices in the financial sector here, Akbar Ali Khan pointed out.
"The bank employees represent the human faces of their corporate entity to their clients. /Ml employees from directors to doormen should scrupulously comply with ethical practices," he said.
“Unfortunately, in developing countries where banking services are limited, bank employees tend to be non-responsive to requirements of poor customers.”
To improve the culture of
ethical environment, Khan said, "There should be a complaint desk in each branch. Complaints of fraud and harassment against bank employees by customers must be attended promptly and banks should compensate the customers for fraud, and negligence of their employees."
He also laid emphasis on central bank's intervention in monitoring and protecting the rights of stakeholders in banks.
Referring to bank directorship, the former adviser said, "The dominance of bank boards by political directors may promote unholy nexus between money and politics. Finally such directors may exert undue pressure on bank regulators and supervisors. He expressed his fear that such partisanship might undermine public confidenceinbanks.
To play a socially and environmentally responsible role, Khan also suggested banks prepare guidelines for financing projects sensitive to environment.
Echoing Kiran's views, the central bank chief hoped that banks and financial institutions would take collective initiatives to revisit their vision for ethical goals.