Banks and unethical Practices I Almost every business concern is involved in unethical practices in one way or the other and so are the banks in Pakistan. The primary source of information on this subject amongst other sources are publications of SSP and annual reports of Pakistan Banking Mahatmas which was established in 2005 to resolve banker- customer disputes and since then it has effectively contributed towards improvement in banking sector-Banks In Pakistan are Involved from miner behavioral Issues to serious and alarming Issues Like harassment of customers for recovery etc.
Here we will discuss the nature of wrong a bank may do and how a bank may avoid the same. Violations of SSP institutionalizing SSP instructions is the responsibility of every bank and its officials and if properly followed, they can save many people from getting into trouble. Surly they are for the sake of good and not Just to show the power of central bank. Specially those instructions which are directly related to customer dealing and customer services must be followed strictly. Customer Harassment history of harassment for recovery goes very back. In past ADAPT (now
STAB) officials had the powers to arrest defaulters which was abolished by former Chief Executive Gene. Pervert Muscular. In current scenario with the vide spread of credit cards, banks became more brutal even forcing people to suicide (according to various news reports in 2009). Lake of efforts on improving credit quality causes increased default rate and thus resulting In banks making alternate “arrangements”. Why give such loans at first place though? Banks usually outsource their debt collection to agencies who employee gangsters to collect debt by force.
They enter in souses by force, threaten the customers and use harsh language, embracing them and torturing them mentally and physically. False information to customers is the sales staff that, for the sake of earning commission, induces people into credit card purchase. They commonly communicate false Information, try to hide certain charges and avoid telling negative characteristics. Banks are one step ahead. They have hidden charges, charge extra money on cash repayment and charge wrong amounts.
There are a number of other mistakes made by banks for which customers have to suffer I. . Wrong deductions, late payment penalties when payment was made before due date, wrong billing after cancellation. Quality of serviceability of services of banks is quite poor if we ignore suited booted marketing staff and city branches with glass doors and shining tiles that are nothing but to attract customers and hide the faces of same staff which Is responsible for the misery of hundreds of customers victim of their mistakes and poor services.
Action on complaint is also common that banks, upon receiving complaints, adopt defensive attitude and assume that they are erect rather then listening to customer and ensuring that there is nothing wrong at their end. They even create more difficulties for customers. There are numerous cases where banks denied their mistakes for years and later found guilty. Record keeping’s also some time fall to protect customer record due to which they secure or duplicate record is not kept so that in case of record destruction, another copy could be used to process a transaction correctly.
Banks are bound by law to keep certain record for specified time period and are responsible for their safety failing which is completely irresponsible. Safe deposits (denial of responsibility)People keep their precious goods in locker and safe deposit boxes for their safety and security but banks outsource their look after to security companies which often fail to protect them and cause bank customers huge losses. It becomes even worse when banks deny their responsibility and refer to security companies and force customers to run after those companies.
Inappropriate exercise of powerhouses are some rights that a bank can exercise I. E. Sale of securities, closure of accounts (nil balance), declaring an account unclaimed etc however there is a roper way for every action and banks must follow them I. E. Banks must issue notice to customers before taking such action. It is inappropriate to close an account or sale a security without prior notice to customer. Breach/Violation of contractors of all is when certain features of a product are widely advertised I. E. O penalty on premature withdrawal, and later on after customers have availed them, they are simply withdrawn even without informing customer. Parallel painkiller’s banking is a term that refers to banking operations carried on by bank employees in duplicate kooks. These are very serious and more of criminal rather then unethical. Banks which have weak internal control and audit system are exposed to such crime. In parallel banking an employee may sell a loan to an individual and keep the margin and thereby costing customers more than what is returned to bank actually.
Where parallel banking takes place, it is with the involvement of many employees and is normally not done by a single person. Professional negligence’s are responsible institute and almost every Job they carry on is sensitive and requires great deal of care. Some time banks fail to do a Job carefully and hence create problems for customer. For example case study from Banking Mahatmas states that upon depositing a check, bank recorded outstanding rather than deposit. In another case study customer asked bank to sell his shares to recover outstanding amount and pay customer the remaining.
Bank sold shares late when prices dropped and not only caused loss to the customer but demanded further money from customer to clear outstanding amount. There are many other cases where banks lost customers safes / documents, entered wrong transactions, sent false billing, denied receipts etc. These case studies show serious lake of honesty and care in banking industry. Reasons and control . Proper education and training of employees most important area of business which is the base of every problem to be created in future is quite ignored.
It is the proper training and development of staff so that they could understand their job and responsibilities attached to it. Len almost every case, there is some professional negligence, carelessness or oversight involved which caused losses to bank, customers or both. Len the absence of Job knowledge and awareness of responsibility, roper procedures are not being followed, instructions violated and mistakes made that are harmful for customers. 2. Effective internal controllable must ensure effective internal control over employees.
They must ensure that proper procedures are being followed in each transaction. Employees in certain positions can easily recover money etc. Effective internal control is necessary for these posts. I. E. Credit procedures must be designed in a way that credit staff could not collect their own commission from borrower. 3. Effective audit and assurance’s must put in place n effective internal audit department who must ensure that employees are not abusing the bank procedure and are not getting into fraudulent practices.