What the Indian government, RBI and banks can do to promote ethical and responsible banking practices
Adam Smith, who envisioned free market economy in his book The Wealth of Nations(1776) wrote another classic before that, The Theory of Moral Sentiments (1759). In this book, Smith suggests human morality depends on sympathy between agent and spectator, or the individual and other members of society. Smith defined ‘mutual sympathy’ as the basis of ‘moral sentiments‘.
Many things have happened since then like free market, industrialisation, globalisation, economic growth, technological revolution, and on the other hand it resulted in economic inequality and global warming. So the question that we should ask ourselves is “where did we go wrong”?
Ernst F Schumacher in his book Small is Beautiful: Economics as if People Mattered(1973) writes, “an attitude to life which seeks fulfilment in the single-minded pursuit of wealth – in short, materialism – does not fit into this world, because it contains within itself no limiting principle, while the environment in which it is placed is strictly limited”.
Businesses in pursuit of profit maximisation as their short-term goal failed to balance the long-term triple bottom line – people, planet and profit. Banking and financial institutions, which should have been responsible institutions, unfortunately, followed the same path of realising short-term goal.
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Courtesy of Swaraja Magazine.