FINANCIAL ETHICS

Where trust was the victim

There was euphoria in the post-liberalization era. The liberalization of the Indian economy in1991 opened the banking sector to private enterprise. well-known financial institutions such as HDFC, ICICI, UTI etc. began their operations in commercial branches, with their reputation fully backing them. Ramesh Gill, Sidahar Subasri , and Jayant Madhod were the three big promoters of the newly founded Global Trust Bank (GTB). On its opening day , on 30 October 1994 ,its collection was record RS. 100 crore of deposits . GTB’s bang catapulted them into the league of big timers.

       Ramesh Gilli became a banking genius overnight . a quick network of bank branches with ultra modern looks, smart front -office executive , quick , efficient, and hassle free service was a surprisingly refreshing experience for the customers who were the victims of the lethargy of the nationalized banks, ATM’s ,phone banking , easy money transfers, internet banking , and dozens of other financial products and services were backed by high tech and modern management systems .

        

      The going was as good as it could get until a certain client by the name Ketan Parikh , the securities wheeler-dealer , came to roost . Gilli , the genius banker , almost pulled another coup when he tried to merge GTB with UTI bank . The Reserve Bank of India (RBI) smelt the rat in the merger and pulled the rug from under the fleet, only to expose GTB’s misdeeds. Gilli was sacked. the securities and exchange board of India (SEBI), the market regulator, put in place orders that prohibited raising money from the capital market. the stock market drive to the shenanigans of Ketan Parikh. GTB was left with non -performing asset worth Rs 11 billion and a negative net worth.

         What went wrong? GIlli, the deposed chairman, maintain ed that he had delegated the tasks to managers. GTB had indulged in giving 52 per cent of its advances to the stock market, against RBI rules. the erosion of value from this sector sucked the bank. In 2004, the government sanctioned the scheme to amalgamate GTB with the Oriental bank of Commerce. accordingly, customers could now continue to normal banking activities with the new bank. Shareholder would be given pro rata payments if any surplus would remain after paying for all liabilities. the new bank also field cases against those who were involved in wrongful activities by which the erstwhile GTB was defrauded for hundreds of crores of rupees, such as Unitel Software Ltd., Shonk Technologies Ltd., and Peral Distilleries Ltd.

 

    Greed had claimed GTB. it betrayed the trust of enthusiastic customers and shareholders who had great hopes in a free market and economically growing India. GTB not only struck a blow to those who were immediately to it, but also to the very idea of economic liberalization.    

human resource management ethics

A DECISION THAT WENT SOUR

Airline employee’s layoff grounds management

In mid-October 2008, in the middle of the festival season in India, the employees of jet airways were in for a rude surprise. The employees, 1900 in all, including 800 permanent employees with more than decade’s service in the organization, were given notices of their retrenchment. Some were informed through SMS only.

       The $6 billion aviation industry in India suffered a total loss of $2 billion till march 2009. Jet airways and kingfisher airlines stuck a strategic alliance to counter the slowdown in the aviation industry, which caused them a loss of Rs.10 crore daily. Putting plans of expansion on hold and agreeing to a code – sharing alliance with king fisher, jet airways expected to break even in 2010. The layoff decision was a part of this business plan.

   Mumbai became the epicentre of the employee action: hundreds of employees of jet airways, including pilots, the cabin crew, and grounds staff came out openly and agitated. They enlisted the sympathy and support of the Maharashtra Navnirman Sena, a rightist political party, and pleaded with its leader, raj Thackery, to support their causes and several of them claimed that they were only breadwinners in their family and that they would be forced into starvation.

When the mind approached one of the jet airway’s executive directors, he apparently gave the management’s decision quite dispassionately. He said that the layoff was not unusual, but agreed that it was a bit sudden. The company had to take the decision to save itself.

MNS decided to ground jet airways in Maharashtra. Naresh Goyal, the chairman of jet airways, reacted immediately. He said that his management had taken a bad decision that was beyond the management. Everyone would be reinstated and they could celebrate their festival season without further worries. He went on to say that he was the father of his company and not bear to see tears in the eyes of his large family.

 

marketing ethics

The Counterfeiters

Brand Dilemma

If anyone thinks that there are no smart people outside of the corporations who can beat them at their own game, then they need to rethink. Brand protection has become the big problem for corporations. The challengers are smarter and faster, they counterfeit brands, fill their packs with their own stuff, which are often spurious, and make big money. The fake industry in India is estimated to constitute about 35 per cent of the branded products sold.

      The brand problems are compounded when, in the world designs, it becomes unmanageable to remain unscathed from copycats. Fashion designers, gems, and jewellery firms, fashion accessories such as wrist watches, sun glasses, etc. Find their designs reproduced and sold as genuinely fake. Consumers who cannot afford high end branded products do not mind flaunting fakes. Somehow people do love to rise their status symbol, albeit with a fake brand, and gain some social equality with the rich and famous, the fake designer market appears to be even higher than that of the counterfeited brands.

        Consumer in Iraq love Unilever products marked ‘Made in France and it closed its last production unit in France a good ten years ago. To its greater disappointment, in India, where it is a market leader in fast moving consumer goods (FMCG’S), it has been establishing that there are over a hundred imitations of their product Fair & Lovely alone. Some of the other more affected brands are Vicks, Axe, Ariel, Parachute, Johnson & Johnson, Clinic plus, Dove, Lux, Colgate, and Pears. It has been reported that of the total market share of Rs. 1,13,000 crores in FMCG’s, the revenue loss due to intimations is Rs. 5000 crores. Up to 30 percent of the packaged toiletries have been reported to be counterfeits.

   The economic and social repercussions of counterfeiting the brands are enormous in terms of employment to the people, revenue loss to the companies, and tax loss to the country, the social cost of potential damage to health is enormous.