Bankers have identified lack of corporate ethics as the topmost reason behind the rising trend in financial crimes in the country's banking sector, according to a study.
Around 73 per cent of the bankers interviewed in the perception survey blamed lack of corporate ethics. Besides, 58 per cent respondents identified absence of exemplary punishment against offences as another reason behind financial crimes in banks.
On the other hand, 53 per cent of the respondents think lack of awareness about crimes, while 50 per cent and 27 per cent of them found lack of motivation and poor compensation respectively for the situation.
Bangladesh Institute of Bank Management (BIBM) conducted the study - "Corporate Ethics and Financial Crime in Banks: Bangladesh Perspective" - whose findings were disseminated through a programme on BIBM campus on Thursday.
The research team interviewed a total of 200 bankers for the survey. The survey found that two-third of the banks has experienced some forms of financial crimes in recent times.
About 65 per cent banks responded that they faced one or more incidents of financial crimes from 2014 to 2016. However, 35 per cent of the banks said they did not face any financial crime during the period.
It is good that the banks did not experience any loss due to financial crimes, but it is not unlikely that the banks are shy to disclose information about crime incidents, said the research paper.
The survey identified three segments - general banking, credit and IT - most vulnerable for financial crimes. The number of credit card-related frauds increased remarkably during 2016-17, the survey observed.
Professor and Director (Training) of BIBM Dr Shah Md Ahsan Habib and his colleagues Professor Md Nehal Ahmed, Associate Professors Dr Mohammad Tazul Islam and Atul Chandra Pandit and Joint Director of Bangladesh Bank (BB) Kamal Hossain conducted the study.
The study suggested addressing the issues like aggressive banking and irrational profit target as short-term approach to contain ethics deficit in the banks.
It also recommended producing and following internal codes of conduct and policy to maintain ethical standards.
The recommendations also include prompt action to ensure exemplary punishment against any financial crime and ensuring role-modelling of network leadership in the banks for due ethical corporate culture.
Speaking as the chief guest in the programme, BB deputy governor Abu Hena Mohammad Razee Hassan said ethics is conceptualised by trust, efficiency, openness, transparency, accountability, development, and community involvement.
He also said Farmers Bank Limited has recently faced the challenge of trust deficit, while it could not repay deposits to the depositors due to liquidity crisis.
The liquidity crisis management is now the main challenge for the bank instead of operating business.
This is the best example how lack of corporate ethical practice can cause disaster in a bank, said the central bank deputy governor.
He refuted the allegations of laundering a huge amount of money through trade invoice mismatch.
He also said the reports on amount of deposits in the Swiss banks by Bangladeshi citizens are not true. A report has been prepared in this regard and submitted to Ministry of Finance.
Former Managing Director of Sonali Bank Limited Siraj Ahmed Chowdhury said trust deficit is the key challenge in banking sector.
He urged the regulator to review the codes of conduct and ethical guides concerned and make them time-befitting.
He also emphasised forming financial ombudsman and strengthening the financial intelligence unit for ensuring an accountable banking sector.
Former Managing Director of Meghna Bank Limited Md Nurul Amin said 10 per cent non-performing loan in the sector is abnormal.
He also said trust deficit in a bank is more harmful than its classified loans.
Former managing director of Prime Bank Limited Ahmed Kamal Khan Chowdhury said chief executive officers of the banks are most responsible in ensuring corporate governance.
Independent Director of Islami Bank Bangladesh Limited and former managing director of Pubali Bank Limited Helal Ahmed Chowdhury said BB has taken many measures by forming regulations and issuing circulars to prevent financial crimes in the banks.
But only the central bank's efforts cannot stop all the crimes. All the stakeholders concerned and the banks will have to work together for establishing ethical practices in the sector, he added.
He also emphasised building professional behaviour in the organisations to prevent financial crimes.
Supernumerary Professor of BIBM Yasin Ali said wilful defaulting of loans is equal to bank robbery.
The government must take the responsibility of such practice, he added.
