The most serious dimension of ethics in banking and bank management relates to the growing incidence of frauds during last two decades. Unfortunately, the recent global experience has been that cases relating to insiders' role and participation in the perpretation of frauds are on increase. A deeper analysis reveals that the participation of insiders in such cases normally takes place at two levels; the first one refers at the position of very top management and, sometimes, at the level of the owner of the institution itself. The alleged involvement of the of the creators in the biggest two bank failures in recent past, one of BCCI and the other of Meridian Biao Group in Africa are most common instances of the same. In other cases, there has been active entanglement on part of the dominant-coalition i.e. of the senior managerial staff. The doctrine of separation between ownership and management presupposes the professional acumen and integrity of character of the managerial cadre; this is particularly important in an institution like banking where the managerial actions are intended to ensure the interest of the investors apart from the shareholders. There is possibly a gradual degeneration in the whole gamut of moral fabric in the society permeating to the banking systems and processes at a very fast pace. That sometimes a banker can be charged even for abetting in a social crime like money laundering is seen in a recent case where a former vice-president of one of the large European banks was sent for trial for allegedly dealing with a client knowing fully well that the latter's deposits contained proceeds of drug trafficking. That this type of behaviour has not escaped even the central bankers is evident from the recent case relating to decision of one South-East Asians government to sack three senior officials of the central bank for their failure to bring in enough evidence within the prescribed limitation period of one year, against certain executives of a large bank, for making bad loans. The collapse in 1995 of Barings Bank, one of the oldest and most conservative UK merchant banks due to the wrong-doings of a single individual will long be remembered as the most fascinating story in the history of bank failures. There is striking similarity in these two incidents, the most important being the total lack ethical values in decision making processes and absolute failure on part of the top management to monitor and controls the activities of the sub-ordinate officials. Probably these types of incidents have forced the Bank of England and the client bank. Formulation of controls rules and regulations and development of management information system are obviously the essential pre-requisites for enforcing discipline. The fact, however, remains that morality and ethical values in corporate governance are more self-generated and self-generated and self-propelled ideas and frauds would continue to occur if people who are expected to follow and enforce rules, dos not do so purely on account of immoral reasons.We in Indian banking system have to learn a lot from these international events. The most important among them is the ethical dimension of banking and bank management and internalising the philosophy that good ethics implies good business,s particularly from the viewpoint of developing long-term sustainable orientation. While token gifts on occasions of social celebrations like Diwali in India or Christmas in some parts of the world may not be considered a serious aberration, the quantum thereof and ultimate intention of the giver behind such gestures are important issues that need to be deliberated.

Experience has shown that in a large number of occasions, the motive has been to influence decision making at a later date. This is an important departure from the professional acumen of decision-making process that helps to distinguish the right from the wrong. To combat this problem, guidelines regarding code of conduct that sometimes include even the the quantum of gift that can be accepted, have been evolved in different countries including the USA. The asset-liability statement which is mandatory for submission by officers of the state-owned banks in India is an experiment in the right direction. The fact, however, remains that more than professional competence, what is needed on part of the bank executives, is to follow strictly the ethical dimensions and value-orientation in all decision-making processes. Top managements of the banks have to seriously ponder how to imbibe the spirit of ethics at each level. Possibly this is going to be the most crucial core competence of bank-executives. The age-old axiom of not only doing things right, but also doing right things should be the guiding principles of all decision process. The training interventions of every bank must include curriculum relating to imbibing ethics and moral values among all levels of staff. Revisiting oriental ideals, values, and beliefs need to be inculcated in all management systems and processes. The idea is simple: without ethics neither the financial system nor any society can survive for long as that has been the teaching of human history.