ETHICS · ETHICS

Ethics, Financial Services and Regulation

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

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Q

Why is financial services regulation alone insufficient to ensure ethical conduct in banking?

A

Regulations set minimum standards, but ethical conduct requires going beyond compliance to internalise values of honesty, fairness, and responsibility.

Q

What does 'ethics' mean in contrast to mere legal compliance in banking?

A

Ethics is the intent to observe the spirit of the law.

Q

What is the core distinction between legal compliance and ethical behaviour in banking?

A

Legal compliance means meeting the minimum requirements set by law, whereas ethical behaviour involves internalising values and acting rightly even when not legally compelled to do so.

Q

What distinguishes a Code of Conduct from a Code of Ethics?

A

Code of Conduct is enforceable; Code of Ethics is followed voluntarily.

Q

Why are ethics and regulation considered complementary rather than alternatives in banking?

A

Regulation provides an external framework of enforceable rules, while ethics supplies the internal values that guide conduct in situations regulation cannot fully anticipate or cover.

Q

Which type of compliance programme best achieves optimum regulatory compliance?

A

A values-based programme emphasising both ethics and compliance.

Q

What historical evidence demonstrates that self-regulation alone is insufficient for banking ethics?

A

History has repeatedly shown that self-regulation without external oversight fails to prevent misconduct, as institutions tend to prioritise profit over broader responsibilities when left to police themselves.

Q

How does the RBI identify banks requiring closer supervision between on-site inspections?

A

Through off-site surveillance by analysing periodic returns and financial data.

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