How To Practice Ethical Banking

Before we talk about practical steps to ethical banking, it’s necessary to have a knowledge on what ethical Banking is all about.

 

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What is Ethical Banking?

Ethical banking involves consciousness of how banking practices affect society and the environment. Financial institutions that emphasize ethical practices look for profit like other financial institutions.

However, they try as much as possible to generate earnings without sacrificing principles or causing havoc.

Ethical banking can also be said to be a core set of principles and conventions that govern how banks interact with their clients, communities and the world at large.

Consequently, the objective of this article is to analyze the various ethical practices to be considered when banking.

 

Practical Steps to Ethical Banking

Some general principles of ethics that should be considered when banking are as follows:

Transparency:

Bank customers should be informed of any rights and obligations, benefits and risks of the service offered and procedures or terms of agreement followed. The customers should be aware of any form of services charged so that they won’t get pessimistic about the company.

Integrity:

Banks, when performing their duties should be honest in their relationship with their clients, customers, employers, shareholders, other groups, institutions and corporations. They shouldn’t be fraudulent in the activities or services they render.

Moral Responsibility:

In the banking profession, a moral responsibility is to be maintained. Moral responsibility is the principles of right and wrong, the ability to know or do what is right or wrong; the right or wrong behaviour that is expected from a person. Customers deposit their properties with the bank because they have a strong belief that the bank can keep their money safe.

Security:

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A banker must be sincere. He or she must honour agreements reached with the customers on whatever interest charges, bank collaterals etc. They must be sincere in their dealing with customers so as not to incur mistrust from the customers.

BASIC CHARACTERISTICS OF ETHICAL BANKS

For you to know that some banks are ethical. There are some certain things you will see these banks do that show their ethics. There are a few key characteristics that nearly all banks maintain when it comes to ethical banking;

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Banks need to screen their clients. The most common reason is to be sure that the client is financially sound. Screening clients is additionally important so that the bank won’t end up making associates with companies and individuals who do not maintain ethical practices.

 

Getting involved in the community;

Banks following ethical principles are typically eager to interact with their local communities, fostering a healthy local environment. Their guidelines may include things like establishing funding for affordable apartment complexes or setting up college scholarships for secondary school students etc.

 

Consistency of ethics;

Banks need to “walk the walk”, keeping both internal and external ethics consistent. Whatever the bank deems ethical externally must be maintained in-house. For example, if a bank refuses to work with a customer because the bank doesn’t accommodate handicapped workers, they should accommodate staff with different in capabilities.

In conclusion, ethical Banking is to be practised by every business personnel and any bank official to sustain a good environment for socialization, and being responsible for good actions.

If you have any questions, write them in the comment section below.

Thank you!