Non-Performing Assets of banks in India is on the rise. Major cause for the mounting NPA’s are industrial loans followed by service and agriculture loans. According to some accounts, the gross NPAs of all the banks in India is approximately around Rs. 8.5 lakh crores. The mounting NPAs are a result of actions from the part of both the lenders and the borrowers. Thus, the major reasons for loans or advances becoming a NPA include weak Credit Appraisal framework, defective monitoring and follow-up by the banks, diversion of funds by the borrowers, wilful defaults, siphoning-off the funds and business failures. It’s not the absence of mechanisms which lead to an increase of NPAs, but the failure from the part of bank employees and the wilful acts of debtors. Both the failure of bank employees to effectively observe and implement rules, regulations and criteria in processing a loan application and the wilful defaulting of loans and advances by debtors have more to do with personal and professional ethics than with processes and procedures. Here comes the significance of ethics in work place.
A workforce with strong ethical culture, can act as a shield against asset erosion of an organization. An organization whose staff act in accordance with a well laid out ethical standards and guidelines would definitely safeguard the organizational resources. But, the challenge is to succinctly and lucidly lay out and establish an ethical guideline for workplace. Ethics is a system of moral principles. It is based on the moral sense of right and wrong that drive and influence the human behaviour. Which actions are right and which are wrong cannot be codified threadbare because, a person’s actions are product of the situations. A right action for one person can be a wrong from another person’s perspective. So, it’s well near impossible to codify what constitute a good action and what constitute a wrong action in all comings and goings in a work situation. But, such a professional code of ethics is the need of the hour. Given, the objective of all the business organizations is Growth which is possible only by the profitability and productivity of the operations, good customer service and high employee retention ratio to name a few. The common thread running through all the above functions are effective resource management. In this backdrop, the ethical guideline has to be based mainly on sound resource management which alone will arrest the resource drain of an organization especially in the banking sector.
In the present context, professional ethics, can be defined as “ not taking any actions which will bring unfair benefits to the organization as well as unproductively and unprofitably drain the resources (men, money, material and most importantly customers) of the organization”.
