Large loan scams in the banking sector are a result of a section of board members and management officials deviating from ethical values and norms, said Qazi Kholiquzzaman Ahmad, chairman of Palli Karma-Sahayak Foundation (PKSF).

Banks and the overall economy suffer as this section of people work for their own interest, he said while delivering the 17th Nurul Matin Memorial Lecture on “Ethics in Banking”.

The Bangladesh Institute of Bank Management (BIBM) organised the event at its auditorium in the capital on March 31.

Erosion of ethical values has been occurring for a long time and rules and norms are violated for self interest, said the economist.

He called upon Bangladesh Bank to strengthen monitoring to improve ethical standards and norms among bankers.

He said the central bank would have to go for immediate punitive measures following such deviations and all large loan scams would have to be brought under trial.

If the central bank indulges in such incidents, the financial sector will become more undisciplined, he said.

Bangladesh Bank and the related ministry should work together to build ethical standards in the banking sector while discussions on ethics and training are necessary, he said.

Discussions among bank board members can be arranged at least once a year by Bangladesh Bank, he said.

“This will increase awareness among board members and management officials,” said Ahmad, adding that workshops for bank officials could be organised to promote ethical practices.

Such training will encourage bankers to be honest, he said, adding that probationary officials should be trained on ethical practices right at the start of their careers.

Bangladesh Bank is always committed to taking action against defaulters and corrupt people, said Governor Fazle Kabir.

He said the central bank always monitors banks' compliance with rules.

Bankers in collusion with adventurous and influential borrowers do threaten not only the appropriate functioning of the banking and financial institutions but also the entire economy, he said.

Such a situation makes ethical behaviour difficult and challenging but also underscores the heightened need for promoting ethics in banking, said the governor.