Business Ethicnkmkmsb

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Business ethic

Harish agarwal

Tybii

Roll no 29


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MAY 2009

What are the different unfair trade practicesfollowed by the business?

Unfair business practices , and oppressiveor acts or practices by often against and areprohibited by law in many countries. Forinstance, in the each member state mustregulate unfair business practices in

accordance with the subject to transitionalperiods. Unfair business practices may arise inmany areas, including:

matters

Matters involving the purchase of products

and services by consumers


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Matters involving claims and the settlementthereof in cases of

In addition to providing for the award ofcompensatory, laws may also provide for theaward of punitive damages as well as thepayment of the plaintiff's legal fees.

At , individuals were not entitled to attorneysfees or punitive damages for wrongful actscommitted by businesses in most states. Mostoften, laws prohibiting unfair businesspractices require consumers to send demandletter to the business prior to commencing

with a law suit. If the business fails to make areasonable offer of settlement within aspecified period of time, and is subsequentlyfound liable in court, it may be liable forpunitive damages and the injured parties

reasonable attorney's fees under many statutes.In some instances, the statutes provide forprevailing plaintiffs to recover double or triplethe actual damages against non-settlingdefendants.


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When statutes prohibiting unfair and deceptivebusiness practices provide for the award of

punitive damages and to injured parties, theyprovide a powerful incentive for businesses toresolve the claim through the settlementprocess rather than risk a more costlyjudgment in court.

Explain the need and importance of businessethics.??

Business ethics seek to proscribe behavior thatbusinesses, firm managers, and workersshould not engage in. Ethics is a source ofguidance beyond enforceable law. It is clearand uncontroversial that firms and theirworkers should not engage in unlawful acts,such as selling harmful or defective products,

and ignorance of the law cannot be used as ajustification for unlawful actions. Businessand management ethics goes beyond the lawlo provide guidelines as to what is acceptablebehavior in business transactions. Being based

on values, however, it is often not clear what


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ethical behavior is and what it is not, sincedifferent people may have different values.

For example, should you report to yoursupervisor an affair between two of your co-workers? Some people would say yes, butothers would think that it is none of theirbusiness. What about selling a product abroad

that has been found to be harmful to healthand is not allowed lo be sold in the UnitedStates? Or buying foreign products made withchild labor? Or polluting abroad in a way thatis not allowed at home? These issues areimportant to the firm because, independent ofits ethical stand, they could seriously affect itsbottom line if, for example, they lead angryconsumers to boycott the firm.

Today, most large companies have established

codes of ethical behavior for the firm'spersonnel and have created "ethics officers" orguardians of corporate rectitude with themission of keeping employees conduct moreupright than the law requires. A company withsuch a code of behavior and an ethics officer is

more likely to hear of unethical behavior in


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the firm before it becomes a legal problem orbefore it leads to consumer reaction, both of

which can harm the image and profitability ofthe firm. There have been many such cases,such as when it became known that Nestle (theSwiss multinational and largest food companyin the world) pushed infant formula in manypoor countries when the mother's milk wouldhave been healthier for the infant, or whenNike was exposed for paying poverty wages inmany developing countries to workers makingits high-priced sneakers.

An important additional incentive for manyfirms establishing codes of conduct for theiremployees and creating ethics officers was theestablishment of sentencing guidelines by thecourts in 1991 that reduced fines for white-collar crimes committed by employees of

companies that had established comprehensiveethics programs. Such ethics programs attemptto indicate as clearly as possible behavior thatthe firm regards as unethical and thatemployees are asked to avoid. These include

using the company's telephone for personal


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use, taking office supplies home, lying aboutbeing sick for missing work, reporting illegal

behavior by other employees, giving oraccepting gifts, and many others.

DEFINE FRAUD and state the different typesof fraud in the banking sector.

Incriminallaw,fraudisintentionaldeceptionmade for personal gain or to damage anotherindividual; the related adjective isfraudulent,and verb is defraud. Fraud is acrimeandacivil lawviolation, though the

specificcriminal lawdefinition varies bylegaljurisdiction. Defrauding people or entitiesofmoneyor valuables is a common purpose offraud.

Electronic fraud

Identity theft


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Credit/Debit card fraud

Cheque fraud.

Credit card fraudCredit card and debit card fraud is a crimewhereby your credit or debit card can be

reproduced in order to use the credit balanceto obtain a financial advantage. The creationand/or alteration of a credit/debit card occurswhen the information contained on themagnetic strip is reproduced. This type ofcrime is known as skimming.

Credit or debit card fraud can also occur whenyour card is lost or stolen and used by a thirdparty to purchase goods with those cards or to

remove cash from the cards.

Credit or debit cards can also be intercepted intransit while being sent to you. Your cards can

also be compromised by a dishonest merchant


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who undertakes unauthorised duplicatetransactions on your card.

Cheque fraudCheque fraud is the use of a cheque to getfinancial advantage by: altering the cheque(payee/amount) without authority

theft of legitimate cheques and then alteringthem

duplication or counterfeiting of cheques

using false invoices to get legitimate chequedepositing a cheque into a third party account

without authority

depositing a cheque for payment knowing thatinsufficient funds are in the account to coverthe deposited cheque.Email scams and fake websites

A number of customers from Australianfinancial institutions have been targeted withhoax emails. These emails appear to be

genuine bank emails.


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Some emails inform the customer that their

security details and passwords need to beupdated by logging into an authentic looking,but fake website. The purpose of thesewebsites is to obtain your log on details toaccess your bank accounts.

What are the steps that a bank can taketo prevent frauds by the insiders?

In addition to watching for warning signs, it isimportant to monitor the potential for internal

fraud risks in certain roles within yourinstitution more closely than others and limitaccess to such data as Social Securitynumbers. The more credentials and accountaccess privileges an employee has forcustomer and employee accounts, the biggerthe risk they pose. Two illustrative examples:

1.Dial F for fraud. For example, customer-service roles within call centers are a target forfraudsters and fraud rings because they have

access to the banks entire database of


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customers and their identities.

If the call center is outsourced, it may beparticularly vulnerable.

2. Guru fraud. The IT department could alsobe susceptible to fraud. Computer techniciansmay be able to divert money from customeraccounts to dummy accounts, or commitidentify theft by accessing customers or

employees personal information.

In one high-profile case, a computer

technician stole the identities of other bankemployees to open accounts at other financial

institutions.

Because of the risks involved with the theft of

customer or employee data, employees shouldonly be allowed to view the information theyneed in order to do their job, and theirbehavior should be closely watched for someof the warning signs listed above.


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Monitoring and prevention

Restricting access to customer data can helpan institution prevent not only identity theft,but also associated fraud schemes such asaccount takeover. Continuous monitoring ofemployee behavior and transactional activity

can help uncover warning signs of internalfraud.

To help increase the efficiency andeffectiveness of monitoring efforts, atechnology solution can automate many of thetime- and labor-intensive processes associatedwith manual fraud detection. By capturing andrecording data across a network, an automatedapproach can alert an institution to threats andcreate an audit trail of flagged activity to

streamline investigation and loss mitigation.

A critical aspect of this type of monitoring is

ensuring that it is in real-time. After-the-factmonitoring can help, but most certainly wont

avoid significant losses.


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The best monitoring systems identify the

behavior that leads up to loss events, targetingfraud at the source and permitting theinstitution to stop fraudulent behavior before itreally starts. In this manner, the best strategycan be deterrence; employees know they arebeing monitored and should be reluctant toattempt any violations of company policy.

The most effective internal fraud technologysolutions include customizable business rules,which can be preset to automatically stop

transactions or flag them for furtherinvestigation. For instance, rules can be setregarding expected employee behavior. Wheninsiders are operating in a matter that isinconsistent with their behavioral profile, the

technology solution will automatically alertthe institution. This can help pinpoint activitysuch as redundant account changes, excessivepassword changes, and demand drafts.

Also, if an employee is accessing

inappropriate information for his or her job


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function, a technology solution can help linkthat activity to new deposit or loan activity

that has been initiated by that individual.

Rules can be updated frequently as aninstitution fine-tunes its internal fraudprevention program.

What is the need of Corporate Governancerating? What would it reveal about thecompany?

According to SEBI sources,SEBI has nointention to making rating of governance of

listed companies mandatory. According to

SEBI, it may be wrong to conclude that

governnce norms compelled companies tosacrifice long-term interests or outlook in the

pursuit of short-term interests and responses to

market signals. SEBI has commissioned


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a study to determine the cost of complianceincurred by companies in respect of the

regulatory framework, including Clause 49 ofthe listing agreement. The Narayana

Murthy committee on corporate governancecode had gone about its work in a highly

professional and democratic manner and SEBIwanted that the professionals should

study the issues raised and itsrecommendations, including the proposal forfacilitation

of whistle blowing; ICRA which rated

companies, adopted certain parameters and

procedures for the purpose and the agencyclarified that it normally required four to six

weeks and the rating was not an audit orcertification of regulatory compliance by the

listed company and the exercise was not aguarantee against fraud. Its primary focus in


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the rating was on the business processes. Keyvariables analysed in rating included the

shareholding structure, governance structure,management processes, board structure

and processes, stakeholder relationship,transparency and disclosures and financial

discipline. The starting point was anassessment of the corporates compliance with

statutory regulations as laid down in clause 49of the listing agreement. Feedback from

independent directors was a key part of the

rating process. International Finance

Corporation, Washington which also carriedout rating of companies followed OECD

guidelines. The corporation faced the task of

adopting the model and developing best

practices suited to companies in emergingeconomies. Global experience showed that


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good governance helped corporates inaccessing capital, especially long-term finance

andequity. The IFC , as a major lender, looked atcorporate governance as a tool to reduce

investor risk and took account of the risk toreputation arising from bad governance. It

was observed that companies which focusedmuch on short term profits tended to lose in

the long-term. Further according tointernational research, corporates with sound

governance practices received higher premiumfor the shares in the stock market.

What are the important criteria of Corporate

Governance rating?

It may be noted that Standard &

Poor has recently launched a new service,

known as Corporate Governance Scores, to


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evaluate corporate governance practices, bothat a country and at a company level. In

the case of country governance assessment,the analysis starts with an evaluation of

governance issues at the country level.Depending upon the level of support, acountry would be assessed as providingstrong support, moderate support or

weak support.

The primary focus of this analysis is at thecountry or national level. However when the

external environment is affected by thepolicies of regional/state governments, thefocus

of analysis would be modified to considersuch influences. In the country governance

analysis the following four main areas areconsidered: legal infrastructure, regulation,

information infrastructure and marketinfrastructure.


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The second part of the analysis is concernedwith company analysis which is

concerned with evaluating the practices atindividual companies. Standard and Poor

assigns scores to a companys overall practices

using a synthesis of the OECDs and

other international codes and guidelines ofcorporate governance practices. The analysis

has four main components. These fourcomponents and sub categories are as follows:

Component 1 concerned with ownershipstructure, relates to transparency of ownership

structure, concentration and influence ofownership.

Component 2 concerned with financial

stakeholder relations , has subcategories suchas

regularity of, access to, and information onshareholder meeting, voting and shareholder

meeting procedures and ownership rights.


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Component 3 concerned with financialtransparency and information disclosure

comprises sub-categories like quality andcontent of public disclosure, timing of, and

access to, public disclosure and independentand standing of the companys auditor.

Component 4, concerned with board structureand process, is related to Board structure

and composition, role and effectiveness ofboard, role and independence of outside

directors and directors and executivescompensation, evaluation and successionpolicies.

SHORT NOTES

Role of Auditor in Corporate Governance.


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Corporate governance loosely refers to thewhole system of rights, processes and controls

established internally and externally over themanagement of a business entity with theobjective of protecting the interests of itsstakeholders. At the most elementary level, itcan be described as the processes by whichinvestors and stakeholders attempt tominimize the transaction costs and agencycosts associated with doing business within acompany. To do so the principal prerequisite isto have a clear, transparent, concise and true

picture of the companys financial affairs. This

has been achieved by the process of auditing,however willful or inadvertent negligence inauditing process has led to disastrousconsequences. Much before Satyam scamshook the Indian corporate sector, the world

had its share of breakdown of corporategovernance in form of Enron, Parmalat,Qwest, Global Crossing etc. all from auditinglacunae which shook the very fundamentals ofcorporate governance. Hence auditing has animportant place in the hierarchy of ideal

corporate governance structure. This paper


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will focus on role of auditors in corporategovernance with the central theme of Quis

custodiet ipsos custodes? or who will guardthe guards, thereby delving into issues

relating to duties of auditors, independence ofauditors, liability of auditors, analyzing andcomparing corporate scandals which tookadvantage of poor accounting standards anddisclosure requirements. Specifically, theresearchers will study the mode ofappointment, remuneration, scope of activitiesand term of external auditors, as well as theirliabilities in case of failure in discharge of

duties, since these aspects of an auditorsstatus are most closely related to theirindependence and function they play in acorporate governance framework of fairdisclosure of financial accounts. Quite in

consonance with the Irani Committee Reportand the advisory by National AdvisoryCommittee on Accounting Standards(NACAS) the researchers would argue that tomake auditing even more transparent andindependent interested parties not directly

connected with the day to day management of


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the company like the representatives ofshareholders, creditors etc. should be part of

the auditing team, remuneration andappointment of auditors in any companyshould be scrutinized in an extraordinarygeneral meeting and not just in AnnualGeneral Meeting, outsourcing of audit relatedwork by reputed auditing firm should befirmly disallowed, a mandatory gap betweenre-appointment of auditors should be enforced.In lines of Naresh Chandra Committee Reportand the recommendation of ICAI theresearcher would further suggest that auditors

be prohibited from performing certain non-audit services, blacklisting of auditors who arefound guilty of dereliction of duty. Further thelaw courts are to be urged to consider thatauditors owe a fiduciary duty towards the

company and thus will be liable for breach ofsuch fiduciary duty for fraudulentmisrepresentation and not just institutionalrepercussion in form of blacklisting etc. byICAI, there has to be a healthy debate toensure that no veil of standard of care and skill

obscure the duties of auditors, the researchers


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would like to draw a parallel betweenprofessionals in medical and auditing sector

and show that courts have diverged on thestandard of skill required, this is a disturbingtrend as the statutory duty of care is same inboth the cases. The researchers wouldconclude by a critique of the proposedsuperstructure in auditing field, the notion hasbeen an unsuccessful attempt in USA, a microsupervision would be much effective andfruitful with representatives from interestedgroups like shareholders etc. but from adifferent company in different field working in

tandem in a loose advisory role with theauditors group is bound to check any mis-alliance between management and auditors.

Frauds by Bank employees.Some fraudsters obtain access to facilitieshandling large numbers of such as a mailroomor post office or the offices of a tax authority(receiving many checks) or a corporate payroll

or a social or veterans' benefit office (issuing


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many checks). A few checks go missing;accounts are then opened under assumed

names and the checks (often tampered oraltered in some way) deposited so that themoney can then be withdrawn by thieves.Stolen blank checkbooks are also of value toforgers who then sign as if they were thedepositor.

exploits a system in which, when a cheque isdeposited to a bank account, the money ismade available immediately even though it is

not removed from the account on which thecheque is drawn until the cheque actuallyclears.

Forgery and altered cheques

Thieves have altered cheques to change thename (in order to deposit cheques intended forpayment to someone else) or the amount onthe face of cheques, simple altering canchange $100.00 into $100,000.00, althoughtransactions of this value are subject to


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investigation as a precaution to prevent fraudas policy.

Instead of tampering with a real cheque, somefraudsters will attempt to forge a depositor'ssignature on a blank cheque or even print theirown cheques drawn on accounts owned byothers, non-existent accounts or even alleged

accounts owned by non-existent depositors.The cheque will then be deposited to anotherbank and the money withdrawn before thecheque can be returned as invalid or for non-sufficient funds.

Accounting fraud

In order to hide serious financial problems,some businesses have been known to usefraudulent bookkeeping to overstate sales andincome, inflate the worth of the company's

assets or state a profit when the company isoperating at a loss. These tampered records arethen used to seek investment in the company'sbond or security issues or to make fraudulentloan applications in a final attempt to obtain

more money to delay the inevitable collapse of


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an unprofitable or mismanaged firm.Examples of accounting frauds: These two

companies "cooked the books" in order toappear as they had profits each quarter whenin fact they were deeply in debt.

Uninsured deposits

There are a number of cases each year wherethe bank itself turns out to be uninsured or notlicensed to operate at all. The objective isusually to solicit for deposits to this uninsured"bank", although some may also sell stockrepresenting ownership of the "bank".

Sometimes the names appear very official orvery similar to those of legitimate banks. Forinstance, the "Chase Trust Bank" of appearedin 2002 with no license and no affiliation to itsseemingly apparent namesake; the real is

based in New York. has also been used toconceal other theft taking place within acompany.

Demand draft fraud

tfraud is usually done by one or more

dishonest bank employees. They remove few
http://en.wikipedia.org/wiki/Demand_drafthttp://en.wikipedia.org/wiki/Demand_drafthttp://en.wikipedia.org/wiki/Demand_draft


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DD leaves or DD books from stock and writethem like a regular DD. Since they are

insiders, they know the coding, punching of ademand draft. These Demand drafts will beissued payable at distant town/city withoutdebiting an account. Then it will be cashed atthe payable branch. For the paying branch it isjust another DD. This kind of fraud will bediscovered only when the head office does thebranch-wise reconciliation, which normallywill take 6 months. By that time the money isirrecoverable.

Rogue traders

A rogue trader is a highly placed insidernominally authorised to invest sizeable fundson behalf of the bank; this trader secretlymakes progressively more aggressive and

risky investments using the bank's money,when one investment goes bad, the roguetrader engages in further market speculation inthe hope of a quick profit which would hide orcover the loss.


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Unfortunately, when one investment loss ispiled onto another, the costs to the bank can

reach into the hundreds of millions of dollars;there have even been cases in which a bankgoes out of business due to market investmentlosses.

Some of the largest ever detected were

perpetrated by currency traders and allegedlydefrauded of 4.9 billion euros

One way to remove money from a bank is totake out a loan, a practice bankers would bemore than willing to encourage if they know

that the money will be repaid in full withinterest. A fraudulent loan, however, is one inwhich the borrower is a business entitycontrolled by a dishonest bank officer or anaccomplice; the "borrower" then declares

bankruptcy or vanishes and the money is gone.The borrower may even be a non-existententity and the loan merely an artifice toconceal a theft of a large sum of money fromthe bank.

Fraudulent loan applications


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These take a number of forms varying fromindividuals using false information to hide a

credit history filled with financial problemsand unpaid loans to corporations usingaccounting fraud to overstate profits in orderto make a risky loan appear to be a soundinvestment for the bank.

Forged documents are often used to concealother thefts; banks tend to count their moneymeticulously so every penny must beaccounted for. A document claiming that asum of money has been borrowed as a loan,withdrawn by an individual depositor ortransferred or invested can therefore bevaluable to a thief who wishes to conceal theminor detail that the bank's money has in factbeen stolen and is now gone.

Wire transfer fraud

Wire transfer networks such as theinternational interbank fund transfer systemare tempting as targets as a transfer, oncemade, is difficult or impossible to reverse. Asthese networks are used by banks to settleaccounts with each other, rapid or overnight


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wire transfer of large amounts of money arecommonplace; while banks have put checks

and balances in place, there is the risk thatinsiders may attempt to use fraudulent orforged documents which claim to request abank depositor's money be wired to anotherbank, often an offshore account in somedistant foreign country.

There is a very high risk of fraud when dealingwith unknown or uninsured institutions.

The risk is greatest when dealing with offshoreor Internet banks (as this allows selection of

countries with lax banking regulations), butnot by any means limited to these institutions.There is an annual list of unlicensed banks onthe site which currentlyis fifteen pages inlength.

Bill discounting fraud

Essentially a confidence trick, a fraudster usesa company at their disposal to gain confidencewith a bank, by appearing as a genuine,profitable customer. To give the illusion of

being a desired customer, the company


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regularly and repeatedly uses the bank to getpayment from one or more of its customers.

These payments are always made, as thecustomers in question are part of the fraud,actively paying any and all bills raised by thebank. After time, after the bank is happy withthe company, the company requests that thebank settles its balance with the companybefore billing the customer. Again, businesscontinues as normal for the fraudulentcompany, its fraudulent customers, and theunwitting bank. Only when the outstandingbalance between the bank and the company is

sufficiently large, the company takes thepayment from the bank, and the company andits customers disappear, leaving no-one to paythe bills issued by the bank.

Payment card fraud is widespread as a means of

stealing from banks, merchants and clients.

]Booster cheques

A booster cheque is a fraudulent or bad chequeused to make a payment to a credit card

account in order to "bust out" or raise the


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amount of available credit on otherwise-legitimate credit cards. The amount of the

cheque is credited to the card account by thebank as soon as the payment is made, eventhough the cheque has not yet cleared. Beforethe bad cheque is discovered, the perpetratorgoes on a spending spree or obtains cashadvances until the newly-"raised" availablelimit on the card is reached. The originalcheque then bounces, but by then it is alreadytoo late.

Stolen payment cards

Often, the first indication that a victim's wallethas been stolen is a phone call from a creditcard issuer asking if the person has gone on aspending spree; the simplest form of this theftinvolves stealing the card itself and charging anumber of high-ticket items to it in the firstfew minutes or hours before it is reported asstolen.

A variant of this is to copy just the credit cardnumbers (instead of drawing attention bystealing the card itself) in order to use thenumbers in online frauds.


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.

COMPUTER CRIME

Cyber crime is the latest and perhaps the mostcomplicated problem in the cyber world. Theterm Cyber Crime has nowhere been

defined in any statute or Act passed or enactedby the Indian Parliament.

Any criminal activity that uses a computereither as an instrumentality, target or a means

for perpetuating further crimes comes withinthe ambit of cyber crime.

It is rapidly evolving from simple e-mailmischief where offenders send obscene e-mail,to more serious offences like theft of


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information, e-mail bombing to crashingservers etc.

The types of cyber crimes includepornography, cyber fraud, defamation, cyberstalking, harassment, IPR theft, data hostage,money laundering, phishing, e-mail bombing,cyber war, illegal EFT.

Cyber crime is different and more heinousthan conventional crime as in cyber crime; thecrime is committed in an electronic mediumand here means read is not a requirement butis rather a general rule under the penal

provisions of the Information Technology Act.The Indian Parliament considered it necessaryto give effect to the resolution by which U.N.

General Assembly adopted Model Law onElectronic Commerce adopted by the United

Nations Commission on Trade Law. As aconsequence of which the InformationTechnology Act, 2000 was passed. This Actwas a welcome step at a time when there wasno legislation on this field. The Act has

however during its application proved to be


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inadequate and there are certain loopholes inthe Act.

Cyber Crime in the Act is neithercomprehensive nor exhaustive. TheInformation Technology Act has not dealt withcyber nuisance, cyber stalking, and cyberdefamation and so on. Cases of spam, hacking,

stalking and e-mail fraud are rampant althoughcyber crimes cells have been set-up in majorcities. The problem is that most cases remainunreported due to lack of awareness.

Capacity of human mind is unfathomable. It is

not possible to eliminate cyber crime from thecyber space. However, it is quite possible tocheck them.

The home user segment is the largest recipientof cyber attacks as they are less likely to have

established security measures in place andtherefore it is necessary that people should bemade aware of their rights and duties.

Users must try and save any electronicinformation trail on their computers, use of

anti-virus software, firewalls, use of intrusion


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detection system etc. and further making theapplication of the laws more stringent to check

crime.

May 2010

What is business ethics and its importance

Business ethics (also corporate ethics) is a

form of applied ethics or professional ethicsthat examines ethical principles and moral orethical problems that arise in a businessenvironment. It applies to all aspects ofbusiness conduct and is relevant to the conduct

of individuals and entire organizations.Business ethics has both normative anddescriptive dimensions. As a corporatepractice and a career specialization, the field isprimarily normative. Academics attempting to

understand business behavior employ


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descriptive methods. The range and quantityof business ethical issues reflects the

interaction of profit-maximizing behavior withnon-economic concerns. Interest in businessethics accelerated dramatically during the1980s and 1990s, both within majorcorporations and within academia. Forexample, today most major corporationspromote their commitment to non-economicvalues under headings such as ethics codesand social responsibility charters. Adam Smithsaid, "People of the same trade seldom meettogether, even for merriment and diversion,

but the conversation ends in a conspiracyagainst the public, or in some contrivance toraise prices."[1] Governments use laws andregulations to point business behavior in whatthey perceive to be beneficial directions.

Ethics implicitly regulates areas and details ofbehavior that lie beyond governmentalcontrol.[2] The emergence of largecorporations with limited relationships andsensitivity to the communities in which theyoperate accelerated the development of formal

ethics regimes


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Stop business malpractices : Some

unscrupulous businessmen do businessmalpractices by indulging in unfair tradepractices like black-marketing, artificial highpricing, adulteration, cheating in weights andmeasures, selling of duplicate and harmfulproducts, hoarding, etc. These businessmalpractices are harmful to the consumers.Business ethics help to stop these businessmalpractices.

Improve customers' confidence : Businessethics are needed to improve the customers'confidence about the quality, quantity, price,etc. of the products. The customers have moretrust and confidence in the businessmen whofollow ethical rules. They feel that suchbusinessmen will not cheat them.

Survival of business : Business ethics aremandatory for the survival of business. Thebusinessmen who do not follow it will haveshort-term success, but they will fail in thelong run. This is because they can cheat a

consumer only once. After that, the consumer


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will not buy goods from that businessman. Hewill also tell others not to buy from that

businessman. So this will defame his imageand provoke a negative publicity. This willresult in failure of the business. Therefore, ifthe businessmen do not follow ethical rules, hewill fail in the market. So, it is always better tofollow appropriate code of conduct to survivein the market.

Safeguarding consumers' rights : Theconsumer has many rights such as right tohealth and safety, right to be informed, right tochoose, right to be heard, right to redress, etc.But many businessmen do not respect andprotect these rights. Business ethics are mustto safeguard these rights of the consumers.

Protecting employees and shareholders :

Business ethics are required to protect theinterest of employees, shareholders,competitors, dealers, suppliers, etc. It protectsthem from exploitation through unfair tradepractices.


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Develops good relations : Business ethics areimportant to develop good and friendly

relations between business and society. Thiswill result in a regular supply of good qualitygoods and services at low prices to the society.It will also result in profits for the businessesthereby resulting in growth of economy.

Creates good image : Business ethics create agood image for the business and businessmen.If the businessmen follow all ethical rules,then they will be fully accepted and notcriticised by the society. The society willalways support those businessmen who followthis necessary code of conduct.

Smooth functioning : If the business followsall the business ethics, then the employees,shareholders, consumers, dealers and suppliers

will all be happy. So they will give fullcooperation to the business. This will result insmooth functioning of the business. So, thebusiness will grow, expand and diversifyeasily and quickly. It will have more sales andmore profits.


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Consumer movement : Business ethics aregaining importance because of the growth of

the consumer movement. Today, theconsumers are aware of their rights. Now theyare more organised and hence cannot becheated easily. They take actions against thosebusinessmen who indulge in bad businesspractices. They boycott poor quality, harmful,high-priced and counterfeit (duplicate) goods.Therefore, the only way to survive in businessis to be honest and fair.

Consumer satisfaction : Today, the consumeris the king of the market. Any business simplycannot survive without the consumers.Therefore, the main aim or objective ofbusiness is consumer satisfaction. If theconsumer is not satisfied, then there will be nosales and thus no profits too. Consumer will be

satisfied only if the business follows all thebusiness ethics, and hence are highly needed


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Explain corporate governance in Insuranceindustry.

Insurance industry bears a fiduciaryrelationship with policyholders and long termperformances. The honesty and integrity ofinsurers are paramount important as theindustry has financial functions. Officers and

employees can break the regulatory measuresand enjoy the money of policyholder. Noinsurer will be successful unless his integrityis tested as sound and useful for the effectiveperformances of the functions. The need ofcorporate governance is realized forconfidence building change-management,investment and viability.

ConfidenceInsurance is based on confidence. New

insurance companies can develop only if theold insurance companies have demonstratedhonestly and integrity. For example, LIC hasproved the insurance has sore reign guarantee.Long term contract is built only on

confidence. Insurance particularly life


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insurance is long-term contract. There shouldbe benchmark standards against which

insurers should demonstrate public image.

Change managementInsurance companies are facing severalchanges in the society. They have to cope withchanges and come forward to challenge thechanges. It has been observed that insuranceindustry is growing faster than GDP.Specialized insurance companies are enteringin the market. Many foreign companies haveentered in India to conduct insurance business.

Health insurance is becoming a need of thehour. The insurance companies have tomanage themselves for maintaining safety andsolvency.

InvestmentInsurance companies manage their fundsthrough investment which involves safetysolvency risk management and protection of

policyholders interest. The actuarial

experiences also help decide insurance


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expansion. It grapples greater challenges suchas increasing number of good governance

standard against which the companies conductand performance would get measured againstthese backdrops. They have to live up withsecurities market and governing rules. SEBIhas formulated several rules and regulationwhich have to be followed by the insurer.

ViabilityThe insurers have to prove their viability.Many new and existing companies now enterin the insurance business. Foreign, insurance

companies have to prove their viability. Publicsector insurers have proved their viability andprivate sector insurers have to operate in a safeand sound manner and in accordance with theapplicable rules and regulations.

Write a short note on audit committee

The Audit committee refers to the governancebody that is charged with oversight of theorganizations audit and control functions.

Although these fiduciary duties are often


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delegated to an audit committee of the boardof directors, the (...) Practice Advisory is also

intended to apply to other oversight groupswith equivalent authority and responsibility,such as trustees, legislative bodies, owners ofan owner-managed entity, internal controlcommittees, or full boards of directorsIn a U.S. publicly traded company, an auditcommittee is an operating committee of theBoard of Directors charged with oversight offinancial reporting and disclosure. Committeemembers are drawn from members of thecompany's board of directors, with a

Chairperson selected from among thecommittee members. A qualifying (cf.paragraph "Composition" below) auditcommittee is required for a U.S. publiclytraded company to be listed on a stock

exchange. Audit committees are typicallyempowered to acquire the consulting resourcesand expertise deemed necessary to performtheir responsibilities.

The role of audit committees continues to

evolve as a result of the passage of the


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Sarbanes-Oxley Act of 2002. Many auditcommittees also have oversight of regulatory

compliance and risk management activities.Not for profit entities may also have an auditcommitteeBoards of Directors and their committees relyon management to run the daily operations of

the business. The Board's role is betterdescribed as oversight or monitoring, ratherthan execution. Responsibilities of the auditcommittee typically include:

Overseeing the financial reporting and

disclosure process.

Monitoring choice of accounting policies andprinciples.

Overseeing hiring, performance and

independence of the external auditors.Oversight of regulatory compliance, ethics,and whistleblower hotlines.

Monitoring the internal control process.


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Overseeing the performance of the internalaudit function.

Discussing risk management policies andpractices with management.

What is corporate social responsibility?Explain in detail

Corporate social responsibility (CSR, alsocalled corporate conscience, corporatecitizenship, social performance, or sustainableresponsible business/ ResponsibleBusiness)[1] is a form of corporate self-

regulation integrated into a business model.


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CSR policy functions as a built-in, self-regulating mechanism whereby a business

monitors and ensures its active compliancewith the spirit of the law, ethical standards,and international norms. CSR is a process withthe aim to embrace responsibility for thecompany's actions and encourage a positiveimpact through its activities on theenvironment, consumers, employees,communities, stakeholders and all othermembers of the public sphere who may alsobe considered as stakeholders.

The term "corporate social responsibility"came into common use in the late 1960s andearly 1970s after many multinationalcorporations formed the term stakeholder,meaning those on whom an organization'sactivities have an impact.

CSR is titled to aid an organization's missionas well as a guide to what the company standsfor and will uphold to its consumers.Development business ethics is one of theforms of applied ethics that examines ethical

principles and moral or ethical problems that


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can arise in a business environment. ISO26000 is the recognized international standard

for CSR. Public sector organizations (theUnited Nations for example) adhere to thetriple bottom line (TBL). It is widely acceptedthat CSR adheres to similar principles but withno formal act of legislation

In recent years CSR is increasingly becominga part of a large number of companies. It isbecoming an important activity for businessesthroughout the globe.

Basically, CSR means that a company's

business model should be socially responsibleand environmentally sustainable. By sociallyresponsible, it means that the company'sactivities should benefit the society and byenvironmentally sustainable it means that the

activities of the company should not harm theenvironment.


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What are Ethical and Unethical BusinessPractices ?Ethical Business Practices

Following are a few ethical business practicesthat should be followed to build an honestreputation and ensure smooth running of theorganization.Investors: Ensuring safety of their money and

timely payment of interest.


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Employees: Provision of fair opportunities inpromotions and training, good working

conditions, and timely payment of salaries.Customer: Complete information of theservice and product should be made available.Personal information of the customers shouldnot be used for personal gain.Competition: Unscrupulous tactics andmethods should be avoided while handlingcompetitors.Government: Rules and regulations regardingtaxes, duties, restrictive and monopolistictrade practices, and unlawful activities like

corruption and bribing should be adhered to.Environment: Polluting industries shouldensure compliance with the government normsregarding air, water and noise pollution.

Unethical Business Practices

The financial sector is abuzz with acts ofviolation of norms to amass wealth in anunethical manner. Following are some of the

activities that come under the ambit of


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unethical practice.:Resorting to dishonesty, trickery or deception.

Distortion of facts to mislead or confuse.Manipulating people emotionally byexploiting their vulnerabilities.Greed to amass excessive profit.Creation of false documents to show increasedprofits.Avoiding penalty or compensation forunlawful act.Lack of transparency and resistance toinvestigation.Harming the environment by exceeding the

government prescribed norms for pollution.Invasion of privacy used as leverage, forobtaining personal or professional gains.Sexual discrimination

What are the various types of frauds in banks

Electronic fraud

Identity theft

Credit/Debit card fraud


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Cheque fraud.

Credit card fraudCredit card and debit card fraud is a crimewhereby your credit or debit card can bereproduced in order to use the credit balanceto obtain a financial advantage. The creationand/or alteration of a credit/debit card occurswhen the information contained on themagnetic strip is reproduced. This type ofcrime is known as skimming.

Credit or debit card fraud can also occur whenyour card is lost or stolen and used by a thirdparty to purchase goods with those cards or toremove cash from the cards.

Credit or debit cards can also be intercepted intransit while being sent to you. Your cards canalso be compromised by a dishonest merchantwho undertakes unauthorised duplicate


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transactions on your card.Chequq fraud

Cheque fraud is the use of a cheque to getfinancial advantage by: altering the cheque(payee/amount) without authority

theft of legitimate cheques and then alteringthem

duplication or counterfeiting of cheques

using false invoices to get legitimate chequedepositing a cheque into a third party accountwithout authority

depositing a cheque for payment knowing thatinsufficient funds are in the account to coverthe deposited cheque.Email scams and fake websites

A number of customers from Australianfinancial institutions have been targeted withhoax emails. These emails appear to begenuine bank emails.


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Some emails inform the customer that theirsecurity details and passwords need to be

updated by logging into an authentic looking,but fake website. The purpose of thesewebsites is to obtain your log on details toaccess your bank accounts.

What is the role of mrtp commission

under this mrtp act, a commission has been

established, the chairman of which is always aperson who is or has been or is qualified to bea judge of the supreme court or high court.The members of the commission are personsof ability, integrity and standing who have

adequate knowledge or experience of, or haveshown capacity in dealing with, problemsrealting to economics law commerce, industry,public affairs or administration. Thecommission is assisted by the director generalof investigation and registrationDG for

carrying out investigations or maintaining a


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register of agreements and for undertakingcarriage of proceedings during the enquiry

before the mrtp commission. The powers ofthe commission include the power vested in acivil court and include further power:

To direct an errant undertaking to discontinuea trade practice and not to repeat the aame

To pass a cease and desist order:

To grant temporary injunction , restraining anerrant undertaking from continuing an allegedtrade practice:

To direct parties to agreements containingrestrictive clauses to modify the same:

To direct parties to issue correctiveadvertisements

To recommend to central government divisionof undertakings or severance ofinterconnection between undertaking if theirworking is prejudicial to public interest or hasled or is leading to mtp or rtp


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What is code of conduct ? Explain in detailThe Company is committed to conducting

business on the basis of morality and to createadded value to its shareholders and also to putunwavering efforts to ensure that allstakeholders are fairly treated. The Companyhas clearly announced that it is the duty andresponsibility of all Directors, Executives andstaffs presence to faithfully follow theBusiness Ethics and comply with the policiesand practices stated in this Code of Conduct.The Companys ultimate goal is to achieve its

business objectives for the benefit of all

stakeholders including the shareholders andthe society.

1. Honesty

Company executives should be truthful to

people involved. They should not intentionallymislead or deceive others by distortinginformation, exaggerating or giving partialtruth. Nor should they discriminate againstpeople by doing or abstaining from doingsomething required to be done.


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2. Integrity

Company executives should exhibit their

personal integrity and courage to uphold theirconvictions by doing things they perceive asright despite pressures favoring the opposite.They should be respectable, impartial, andcommitted to their principles. They should

fight for their beliefs and never compromisetheir principles for any objective that wouldturn them into deceivers or immoral persons.

3. Trust worthiness

Executives should disclose and provide relatedinformation, as well as correct anymisunderstanding on facts. They should try inevery proper way to fulfill their promises.They should not abuse technical or legalinterpretation as an excuse not to cooperate or

comply with contractual obligations.

4. Loyalty

Our executives should exhibit their loyalty tothe company by dedicating themselves to their

respective duties and to its people by


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providing support and assistance wheneverrequired. They should not use or disclose

confidential information for personaladvantage. On the contrary, they shouldmaintain the ability to make decisionsindependently as professionals, avoidinginappropriate conduct and conflict of interest,as well as being faithful to the company andtheir colleagues. If the executives intend toleave and work somewhere else, they shouldnotify appropriately in advance and treat thecompany information as important andconfidential. They should not exploit their

former positions for their own benefit.

5. Fairness

All executives should be fair and just towardsall people. They should not use their power

deliberately, neither should they resort tocheating or inappropriate tactics to obtain ormaintain benefits or advantages from misledor distressed people. Fair-minded executivesshould disclose the agreements set forconsideration and treat everyone equally, be

open to disagreeable opinions, willing to admit


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the mistakes they make, and ready to shiftpositions and beliefs to appropriate and correct

ones, if the situation demands.6. Concern for others

Our executives should be considerate,sympathetic, kind, and well intentioned toothers. As the golden rule says, Treat others

the way you want to be treated, executives

should provide the help that people need. Theyshould also pursue proper means to achievingbusiness objectives in a way that the businessobjectives are aligned with the objectives and

interests of people

4. SHORT NOTES

CAUSES , IMPACTS AND REMEDIES OF

CORRUPTIONCORRUPTION:

An act done with intent to give someadvantage inconsistent with official duty andthe rights of others. It includes bribery, but is

more comprehensive; because an act may be


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corruptly done, though the advantage to bederived from it be not offered by

another. Sometimes corruption is understoodas something against law; such as, a contractby which the borrower agreed to pay thelender usurious interest. It is said, in such case,that it was corruptly agreed, etc.

CAUSES OF CORRUPTION:

The causes of corruption are many andcomplex. Following are some of the causesof corruption.

Emergence of political elite who believe ininterest-oriented rather than nation-orientedprogrammes and policies.

Artificial scarcity created by the people withmalevolent intentions wrecks the fabric of the

economy. Corruption is caused as well as increasedbecause of the change in the value system andethical qualities of men who administer. Theold ideals of morality, service and honesty are

regarded as an achronistic.


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Tolerance of people towards corruption,complete lack of intense public outcry

against corruption and the absence of strongpublic forum tooppose corruption allow corruption to reignoverpeople.

Vast size of population coupled with

widespread illiteracy and the poor economicinfrastructure lead to endemic corruption inpublic life.

In a highly inflationary economy, lowsalaries of government officials compel them

to resort to the road of corruption. Graduatesfrom IIMs with no experience draw a farhandsome salary than what governmentsecretaries draw.

Complex laws and procedures alienate

common people to ask for any help fromgovernment.

Election time is a time when corruption is atits peak level. Big industrialist fund politiciansto meet high cost of election and ultimately to

seek personal favour. Bribery to politicians


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buys influence, and bribery by politicians buysvotes. In order to get elected, politicians bribe

poor illiterate people, who are slogging fortwo times meal.

REMEDIES OF CORRUPTION

Is it possible to contain corruption in oursociety? Corruption is a cancer, which everyIndian must strive to cure. Many new leaderswhen come into power declare theirdetermination to eradicate corruption but soonthey themselves become corrupt and startamassing huge wealth.

Many People become materialistic and moneyoriented, there is no important of ethics andmorals in business dealings. Many peoplethinking that money which coming to theirpocket is good, same way many thinking that

money which going out from their pocket isbad, but they dont consider the way money

traveling.

This is because these kinds of people have nomoral accountability to anybody; and these

kind have people have full trust on money,


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they strongly believing that money can holdbig role in their life, they believing that money

can solve their current and future problems,they believing that money can give them lifewithout problems. Some of the remedies aregiven below:

What can be remedy of corruption? It can be

only possible if people can understand andstart to believe the values of ethics andmorality in their life. People will start tobelieve that their life is accountable if theyreally start to believe in GOD, in oneness ofGOD and if they really start to live life on theway which GOD has chosen for mankind.GOD has given the wisdom to each and everyhuman being, heart of everyone tellinghim/her that the way he/she following to getmoney is good/bad. The most important thing

is person should listen and follow the goodpart of his heart.

Foolproof laws should be made so that thereis no room for discretion for politicians andbureaucrats. The role of the politician should

be minimized. Application of the evolved


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policies should be left in the hands ofindependent commission or authority in each

area of public interest. Decision of thecommission or authority should bechallengeable only in the courts.

Cooperation of the people has to be obtainedfor successfully containing corruption. People

should have a right to recall the electedrepresentatives if they see them becomingindifferent to the electorate.

Funding of elections is at the core ofpolitical corruption. Electoral reforms are

crucial in this regard. Several reforms like:State funding of election expenses forcandidates; strict enforcement of statutoryrequirements like holding in-party elections,making political parties get their accounts

audited regularly and filing income-taxreturns; denying persons with criminal recordsa chance to contest elections, should bebrought in.

Responsiveness, accountability and

transparency are a must for a clean system.


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Bureaucracy, the backbone of goodgovernance, should be made more citizen

friendly, accountable, ethical and transparent. More and more courts should be opened forspeedy & inexpensive justice so that casesdont linger in courts for years and justice is

delivered on time.

Local bodies, Independent of thegovernment, like Lokpals, Lokadalats, CVCsand Vigilance Commissions should be formedto provide speedy justice with low expenses.

A new Fundamental Right viz. Right toInformation should be introduced, which willempower the citizens to ask for theinformation they want. Barring someconfidential information, which concernsnational and international security, other

information should be made available togeneral public as and when required. Stringentactions against corrupt officials will certainlyhave a deterrent impact.


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RBI And Corruption

As of today, Govt of India cannot function

without a LEGAL TENDER --- a unit that itwould use for

giving payments as salaries, rent etc to runpolice, military, courts, prosecution, maintainparks and forests etc

acceping taxes from private persons to createfunds to meet above payments

So to meet above two functions, govt of Indianeeds so called "Indian Rupee" which is the

legal tender of India. A welcome side-effect ofabove is, that the above legal tender alsoserves as means for private persons forexchange of payments, and storage of"purchasing powers".

The Reserve Bank of India (RBI) is theagency which issues legal tender and alsodecides which companies will get the label ofBANK. What is the significance of the label"bank". When RBI labels a company as

"bank", the credit issued by that company gets


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The answer, as per today's laws, is --- if RBIhas labeled the company C as a bank, then so

called "money supply" increases or else itremains unchanged.

So RBI's chaiman, directors and senior staffhas two important powers

issuing rupee notes

deciding if credit issued by a company will belabelled as "money" or not, which RBI's seniorstaff decide by issuing a label of "scheduledbank" to a company"

These powers of RBI's senior staff areDISCRETIONARY powers. PM and FinanceMinisters, and senior MPs have some controlover them, as PM/FM can expel a RBI'schaiman/director. And as always, the

individuals with whom RBI's senior staffmembers have nexuses also have influenceover them. In any case, the common men DONOT have an iota of control over RBI's seniorstaff.


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The MAIN problem

The RBI's senior staff has control over banks'senior staff, and so the RBI's senior staffmembers ensure that banks' senior staffmembers would give loans worth 100s ofcrores, often without any collateral, to theelitemen with whom RBI's senior staff hasnexuses. Due to the nexuses, these elitemenget away without paying it back, and thuscreate NPA. To cover the NPA, the RBI'sGovernor/Directors and Finance Ministerincrease the money supply, which reduces the

net purchasing power of commons. This ruinscommons's lives.

Cuases of the problem

The reason why RBI's Governors/Directorsand PM/FM can raise money supply recklesslyis becuase the commons in India have NOprocedure by which they can control money

supply or supply of legal tender. The citizenry


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need NOT control private currencies if any, orbonds/shares which serve as quasi-currency,

but citizens MUST have firm control on legaltender that is issued by the state. Oncecitizenry gets administrative procedures, bywhich they can control money supply, RBI'sdirectors' recklessness will reduce.The reason why RBI governors/directors raisemoney supply recklessly is to serve the theelitemen with whom they, or PM/FM andother banks' chairman/directors have nexuses.In many cases, the RBI directors and directorsof many banks are elitemen themselves. How

can citizens check these nexuses? I do NOTknow of any way that will ensure thatRBI/banks' chairman/directors remainnexusfree, but I certainly know of procedurethat will ensure that RBI/banks' chairman

directors DO NOT misuse their powersrecklessly, and if they misuse it, extent will bemuch less than today.

May 2011


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what is the role of mrtp commission?

under this mrtp act, a commission has been

established, the chairman of which is

always a person who is or has been or is

qualified to be a judge of the supreme court

or high court. The members of the

commission are persons of ability, integrityand standing who have adequate

knowledge or experience of, or have shown

capacity in dealing with, problems realting

to economics law commerce, industry,

public affairs or administration. Thecommission is assisted by the director

general of investigation and registrationDG

for carrying out investigations or

maintaining a register of agreements and

for undertaking carriage of proceedings

during the enquiry before the mrtp

commission. The powers of the commission

include the power vested in a civil court and

include further power:


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To direct an errant undertaking to

discontinue a trade practice and not to

repeat the aame

To pass a cease and desist order:

To grant temporary injunction , restraining

an errant undertaking from continuing an

alleged trade practice:

To direct parties to agreements containing

restrictive clauses to modify the same:

To direct parties to issue corrective

advertisements

To recommend to central government

division of undertakings or severance of

interconnection between undertaking if

their working is prejudicial to public

interest or has led or is leading to mtp or

rtp

What is the difference between a restrictive

trade practice and an unfair trade practice?


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Unfair trade practice" as per Section 2(r)

means a trade practice which, for thepurpose of promoting the sale, use or

supply of any goods or for the provision of

any service, adopts any unfair method or

unfair or deceptive practice, while

restrictive trade practice means a trade

practice which tries to manipulate the price

or conditions of delivery to affect flow of

supplies in the market relating to goods or

services in such a manner as to impose on

the consumers unjustified costs or

restrictions [as per section 2(nnn)].

Defination of fraud under Indian penal codeand Indian contract act.

DEFINITION OF FRAUD

Fraud is defined as "any behavior by which

one person intends to gain a dishonest


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advantage over another". In other words ,fraud is an act or omission which is intended

to cause wrongful gain to one person andwrongful loss to the other, either by way ofconcealment of facts or otherwise.

Fraud is defined u/s 421 of the Indian PenalCode and u/s 17 of the Indian Contract Act.

Thus essential elements of frauds are

1. There must be a representation andassertion;2. It must relate to a fact;3. It must be with the knowledge that it is false

or without belief in its truth; and4. It must induce another to act upon theassertion in question or to do or not to docertain act.

What is code of conduct? Explain briefly codeof ethics which is laid down by IRDA.

What is code of conduct ? Explain in detailThe Company is committed to conducting

business on the basis of morality and to create


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added value to its shareholders and also to putunwavering efforts to ensure that all

stakeholders are fairly treated. The Companyhas clearly announced that it is the duty andresponsibility of all Directors, Executives andstaffs presence to faithfully follow theBusiness Ethics and comply with the policiesand practices stated in this Code of Conduct.The Companys ultimate goal is to achieve itsbusiness objectives for the benefit of allstakeholders including the shareholders andthe society.

1. Honesty

Company executives should be truthful topeople involved. They should not intentionallymislead or deceive others by distortinginformation, exaggerating or giving partial

truth. Nor should they discriminate againstpeople by doing or abstaining from doingsomething required to be done.

2. Integrity

Company executives should exhibit their

personal integrity and courage to uphold their


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convictions by doing things they perceive asright despite pressures favoring the opposite.

They should be respectable, impartial, andcommitted to their principles. They shouldfight for their beliefs and never compromisetheir principles for any objective that wouldturn them into deceivers or immoral persons.

3. Trust worthiness

Executives should disclose and provide relatedinformation, as well as correct anymisunderstanding on facts. They should try inevery proper way to fulfill their promises.

They should not abuse technical or legalinterpretation as an excuse not to cooperate orcomply with contractual obligations.

4. Loyalty

Our executives should exhibit their loyalty tothe company by dedicating themselves to theirrespective duties and to its people byproviding support and assistance wheneverrequired. They should not use or discloseconfidential information for personal

advantage. On the contrary, they should


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maintain the ability to make decisionsindependently as professionals, avoiding

inappropriate conduct and conflict of interest,as well as being faithful to the company andtheir colleagues. If the executives intend toleave and work somewhere else, they shouldnotify appropriately in advance and treat thecompany information as important andconfidential. They should not exploit theirformer positions for their own benefit.

5. Fairness

All executives should be fair and just towards

all people. They should not use their powerdeliberately, neither should they resort tocheating or inappropriate tactics to obtain ormaintain benefits or advantages from misledor distressed people. Fair-minded executives

should disclose the agreements set forconsideration and treat everyone equally, beopen to disagreeable opinions, willing to admitthe mistakes they make, and ready to shiftpositions and beliefs to appropriate and correctones, if the situation demands.


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6. Concern for others

Our executives should be considerate,

sympathetic, kind, and well intentioned toothers. As the golden rule says, Treat othersthe way you want to be treated, executives

should provide the help that people need. Theyshould also pursue proper means to achieving

business objectives in a way that the businessobjectives are aligned with the objectives andinterests of people

Explain SEBI guidelines for good corporate

Governance

The practice of allocation of resources

among different competing entities as well

as its terms by a central authority was

discontinued. The issuers complying with

the eligibility criteria now have freedom toissue the securities at the market

determined rate. The secondary market

overcome the geographical barriers by

moving to screen based trading which make

trading system assemble to everybody


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anywhere in India. Trades enjoy counter

party guarantee. The trading cycle

shorterned to a day and trade settled within2 working days while all deferral products

are banned. Today the Indian securities

market stand shoulder to shoulder with

most developed market in south America

and far east. According to sebis former

chairman , the securities exchange board of

india as focusing on following areas to

improve corporate governance

!) Insuring timely disclosure of relevant

information

2) providing efficient marketing system3) demonstrating reliable and efficient

resources

4) enabling higher standards of governance

Role of Directors in enforcing Good CorporateGovernance.

The Roles and Responsibilities ofCompany Boards and Directors


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The company board of directors ischarged with the responsibility of

maintaining good corporategovernance. There are importantpolicy and performance elements tothese responsibilities. The board ofdirectors is the guardian of fairness,

transparency and accountability inall of the major financial andbusiness dealings of the company,defending the interests of investorsand wider stakeholders. To fulfil this

responsibility directorial boards arerequired to remain active, informedand competent in the supervision ofthe company. However companydirectors have more than simply a

regulatory role - also they areultimately responsible for the

performance of the business, inagreeing the strategic direction ofthe company, appointing the chiefexecutive, and monitoring the


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performance of the company. Thelegal, financial and institutional

structures and relationships ofcorporate governance provide aframework within which companyboards of directors operate indifferent countries, and board

structure, representation andpractices continue to vary due tocultural differences despite theadoption of international codes ofpractice. This research theme will

examine the practical issues ofcompany director selection anddevelopment, director duties andcompensation, and the operationand assessment of boards in both

their policy and performance rolesand responsibilities. A major

research project on The ChangingRoles and Responsibilities ofCompany Boards and Directors,examining current corporate


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governance practices in largeAustralian corporations commenced

early in 2003 in partnership with theleading Australian law firm DibbsAbbott Stillman

SHORT NOTESCorporate Governance in bank

Good corporate governance of banks is of avital concern to banks themselves as well as tothe banking supervisors. During the pastdecade, listed banks and even non-listedinstitutions worldwide started to publiclyemphasise that good corporate governance isof vital concern for the company, and even toadopt individualised corporate governance

codices. In turn, the Basel Committee onBanking Supervision already published twoeditions of a guideline entitled Enhancing

corporate governance for bankingorganisations which reflects the supervisors'

taking on the issue to perfection. Last but not


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least, two years into the financial crisis, theissue of banks' good corporate governance has

started to attract pronounced interest, with theOECD taking a leading role. Against thisbackdrop, the article, on the one hand,discusses the particularities of banks'corporate governancedue in large part tobanking regulation and to deposit insurancein a principal-agent framework, and, on theother hand, presents the supervisors' financialstability perspective taking the BaselCommittee's guidance as a starting point. Thearticle concludes with reflections on some

tentative lessons from the current crisis for(banks') good corporate governance: banks'corporate governance differs from that of ageneric firm. Deposit insurance and prudentialregulation, while aimed at compensating for

deficits in the monitoring and control ofbanks, both act to exacerbate the particularproblems that are inherent in banks' corporategovernance. From this perspective, bankingregulation and banks' corporate governanceinteract as the driving forces of a vicious circle

that produces ever more regulation. Hence,


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one may doubt whether banks' corporategovernance should map the way forward for

corporate governance in general. In particular,this holds true for the way forward to

regulating bankers' pay.

Characteristics of Fraudsters

Less than 10 percent of fraud perpetratorshave prior criminal convictions; those whocommit fraud are largely first-timeoffenders, even though the average fraudperpetrator is older than 40 years of age.

Additionally, fraudsters generally exhibitone of two behavioral traits: They eitherlive beyond their apparent means, or theyare experiencing financial difficulties. Theymay also be trusted employees of anorganization.

Many organizational managers are takenaback when they learn a long-time,trusted employee has committed fraud.Its an unfortunately common event thatfew organizations prepared for or even

envisioned. However, one often-forgotten


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characteristic all fraudsters possess ishumanity. Its important to remember that

individuals who commit fraud arentnecessarily bad people. Even the mosthonest person can turn to fraud if, forinstance, he cannot afford treatments forhis wifes terminal illness.

For these reasons, and numerous others,its important for firms to have internalcontrols in place that preclude theopportunity for fraud, minimizing thiscausal factor so that the risk of fraud issignificantly decreased.

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