KARACHI, Sept 17: State Bank Governor Dr Ishrat Husain, in his last ceremonial address to top bankers of the country, warned them on Saturday against dazzling temptations that might weaken their will to work honestly.
“There would be dazzling temptations in front of you, there would be occasions that nobody will be looking over your shoulders and the regulators may fail to detect your lapses,” he said to the bankers while delivering his presidential address at the 55th annual general meeting of the Institute of Bankers Pakistan.
“But remember that by indulging in unethical practices you will not only betray your own conscience but also violate the self-imposed rules of professionalism,” warned Dr Husain, who took charge of the central bank in 1999 and is due to retire in December this year.
“While the competitive environment in the banking industry has taken a turn for better it has also given some cause for concerns,” he said. Speaking about the tough challenges the bankers now face in a more competitive market than before, Dr Husain warned: “Some of you may feel pressurized to make compromises, cut corners and adopt ethically questionable means.”
But he made it a point that “ostentatious life styles of bankers do not get unnoticed or commented upon. Violations of professional ethics is something which you and only you are responsible and accountable and please do not rationalize it by telling yourself that nobody has been hurt.”
The SBP chief warned the senior bankers of one particular threat that has stemmed from the privatization of banks. “As more and more industrial families and big business houses take over the reins of banks, some of them may exert direct or indirect pressures or persuasions on the management to use the bank’s deposit base to acquire new businesses or expand existing businesses,” he added.
“Clever schemes will be presented to you under which the prudential regulations will be followed in letter but reciprocal arrangements and linked transactions will be set up whereby the ultimate beneficiary will be the major shareholder.”
“I am quite confident that the SBP inspection teams and market intelligence will eventually track down these arrangements and transactions, but it will reflect poorly upon those of you who were wittingly or unwittingly involved in them.”
“It is with great difficulty that we have got the banks privatized, but please do not commit such actions that will provide ammunition to the detractors of privatization,” Dr Husain advised the heads of banks and DFIs present at the meeting.
Dr Husain spoke at length about the achievements the banking sector has made during his tenure as SBP head. “The banking system in Pakistan has come a long way from the bad old days of pre-1997 period and has become sound, strong and healthy.”
“But to sustain this path in the future requires that culture, values and ethics of the banking profession are changed in a fundamental way. I am quite optimistic that as you have changed the structure, processes, skills mix and incentives in the last six years, you will successfully embark upon this new journey.”
“In 2011, the (then) retiring governor of the State Bank will be expressing his thanks, satisfaction and commendation to you for completing this journey of a new culture, new set of value and high ethical standards.”