Bank Manager & Dormant Account: Ethical Issues

You are working as an executive in a nationalised bank for several years. One day one of your close colleagues tells you that her father is suffering from heart disease and needs surgery immediately to survive. She also tells you that she has no insurance and the operation will cost about ₹ 10 lakh. You are also aware of the fact that her husband is no more and that she is from a lower middle class family. You are empathetic about her situation. However, apart from expressing your sympathy, you do not have the resources to fund her. A few weeks later, you ask her about the well-being of her father and she informs you about his successful surgery and that he is recovering. She then confides in you that the bank manager was kind enough to facilitate the release of ₹ 10 lakh from a dormant account of someone to pay for the operation with a promise that it should be confidential and be repaid at the earliest. She has already started paying it back and will continue to do so until it is all returned. What are the ethical issues involved?

How to Approach

This question tests ethical reasoning and application of principles in a real-life scenario within a professional context. The answer should identify the multiple ethical dilemmas involved, analyze them using relevant ethical principles (integrity, objectivity, confidentiality, etc.), and propose a reasoned course of action. A structured approach focusing on stakeholders, conflicting values, and potential consequences is crucial. The answer should avoid simply stating what *should* have been done, and instead demonstrate a nuanced understanding of the complexities involved.

Model Answer

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Introduction

Public service ethics demands a high standard of conduct from individuals entrusted with public or organizational resources. The case presented highlights a complex ethical dilemma faced by a bank executive, involving conflicting duties of loyalty, confidentiality, and integrity. The situation raises questions about the misuse of bank funds, even with benevolent intent, and the potential erosion of trust in the financial system. The core issue revolves around whether a good outcome (saving a life) can justify unethical means (misappropriation of funds, breach of confidentiality). This scenario necessitates a careful examination of the ethical principles at play and their relative importance.

Identifying the Ethical Issues

Several ethical issues are interwoven in this scenario:

Misappropriation of Funds: The bank manager’s act of releasing funds from a dormant account without proper authorization constitutes a clear breach of trust and potential financial irregularity. This violates principles of accountability and responsible financial management.
Breach of Confidentiality: The colleague’s disclosure of her father’s medical condition and the manager’s actions, along with her request for secrecy, compromises the confidentiality expected within a professional setting.
Conflict of Interest: The bank manager’s decision to help his colleague, while empathetic, creates a conflict of interest. His personal relationship influenced his professional judgment.
Lack of Transparency: The insistence on confidentiality prevents scrutiny and accountability, potentially covering up wrongdoing.
Moral Hazard: Facilitating such an action could create a precedent, encouraging others to seek unethical solutions to personal problems, potentially leading to systemic issues.

Stakeholder Analysis

Identifying the stakeholders and their interests is crucial:

The Colleague: Her interest is saving her father’s life, understandably prioritizing personal well-being.
The Bank Manager: Motivated by empathy and a desire to help, but compromised his professional integrity.
The Bank: Its interests lie in maintaining financial integrity, public trust, and adhering to legal regulations.
The Account Holder of the Dormant Account: Their rights and ownership of the funds are violated.
The Executive (You): Caught in a difficult position, witnessing unethical behavior and grappling with the dilemma of whether to report it.

Applying Ethical Principles

Several ethical principles are relevant here:

Integrity: Upholding honesty, trustworthiness, and strong moral principles. The manager’s actions lacked integrity.
Objectivity: Making decisions based on facts and evidence, free from bias. The manager’s decision was influenced by personal feelings.
Accountability: Taking responsibility for one’s actions and decisions. The manager avoided accountability through secrecy.
Transparency: Openness and honesty in all dealings. The insistence on confidentiality undermined transparency.
Beneficence: Acting in the best interests of others. While the intention was benevolent, the means were unethical.
Non-Maleficence: Avoiding harm. The actions could potentially harm the bank’s reputation and the account holder.

Course of Action & Justification

As the executive, while empathetic to the colleague’s situation, the ethically correct course of action would have been to discreetly advise her to explore legitimate avenues for financial assistance, such as medical loans, charitable organizations, or government schemes. After learning about the manager’s actions, reporting the incident to a higher authority within the bank (e.g., the internal audit department or a compliance officer) is essential. This is despite the potential for strained relationships.

Justification: While the outcome was positive, the means employed were fundamentally flawed. Allowing such actions to go unchecked would erode the bank’s ethical culture and potentially lead to more serious financial irregularities. Upholding the principles of integrity and accountability is paramount, even when faced with difficult personal circumstances. The long-term consequences of compromising ethical standards outweigh the short-term benefit of saving a life through unethical means.

Legal Implications

The manager’s actions could potentially have legal ramifications, including charges related to embezzlement, fraud, or breach of trust, depending on the specific banking regulations and laws in place. The bank could also face regulatory penalties for failing to maintain adequate internal controls.

Conclusion

This case underscores the importance of ethical decision-making in professional life, particularly within the financial sector. While empathy and compassion are valuable qualities, they must be balanced with a commitment to integrity, accountability, and adherence to legal and ethical standards. A strong ethical culture within organizations, coupled with robust internal controls and reporting mechanisms, is crucial for preventing such dilemmas and maintaining public trust. The situation highlights that good intentions do not justify unethical actions, and transparency is essential for fostering a responsible and accountable environment.

Answer Length

This is a comprehensive model answer for learning purposes and may exceed the word limit. In the exam, always adhere to the prescribed word count.

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Additional Resources

Key Definitions

Moral Hazard

A situation where one party takes more risks because someone else bears the cost of those risks. In this case, the manager's willingness to bend the rules might encourage others to seek unethical solutions.

Conflict of Interest

A situation in which a person's personal interests could compromise their professional judgment or objectivity.

Key Statistics

According to a 2023 report by Transparency International, India ranks 85 out of 180 countries in the Corruption Perception Index, indicating a significant level of perceived corruption.

Source: Transparency International, Corruption Perception Index 2023

A 2022 survey by Deloitte found that 43% of employees have witnessed misconduct at work, but only 36% reported it.

Source: Deloitte, 2022 Global Ethics Survey

Examples

Satyam Scandal (2009)

The Satyam Computer Services scandal involved widespread financial fraud and manipulation of accounts, demonstrating the devastating consequences of a lack of ethical leadership and internal controls.

Frequently Asked Questions

▶Is it ever justifiable to break the rules for a good cause?

While consequentialist ethics might suggest that a good outcome can justify unethical means, deontological ethics emphasizes the importance of adhering to moral duties and principles regardless of the consequences. In most professional contexts, upholding ethical standards is paramount, even when faced with difficult choices.

Topics Covered

EthicsGovernanceFinanceProfessional EthicsConflict of InterestAccountability

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