ETHICS · ETHICS

Banking Ethics - Changing Dynamics

Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Ethics in Banking — Ethics in Banking.

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Q

What is the root cause of the 2008 global financial crisis from an ethical perspective?

A

Systemic ethical failures — including excessive risk-taking, mis-selling of complex products, conflicts of interest, and poor governance — driven by short-term profit incentives over long-term stability.

Q

What is Banking 4.0 as described in the evolution model of banking?

A

AI-platform-driven banking delivering agile, scalable and resilient outcomes.

Q

Which ethical problem is defined as selling financial products that are not suitable or appropriate for the customer?

A

Mis-selling — recommending or selling products without regard for the customer's actual needs, risk profile, or financial understanding.

Q

What is Banking 1.0 characterized by in the chapter's evolution model?

A

Mainframe system of record — the earliest digital banking generation.

Q

What does 'regulatory capture' mean in the context of banking ethics?

A

Regulatory capture occurs when regulatory bodies are influenced or dominated by the very institutions they are meant to oversee, leading to weakened oversight and ethical lapses.

Q

What does Banking 3.0 represent in the chapter's generation model?

A

Consistent omnichannel self-service experience for customers.

Q

Why are short-term profit incentives considered an ethical risk in banking?

A

Short-term profit incentives encourage excessive risk-taking and mis-selling, prioritising immediate gains over long-term institutional stability and customer welfare.

Q

What did the Saraf Committee (1994) recommend for India's payment systems?

A

EFT system, ECS Credit for repetitive payments, and Electronic Debit Clearing for utilities.

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