A crisis that changed the banking scenario in India: exploring the role of ethics in business

Abstract

Digital business has marked an era of transformation, but also an unprecedented growth of cyber threats. While digital explosion witnessed by the banking sector since the COVID-19 pandemic has been significant, the level and frequency of cybercrimes have gone up as well. Cybercrime officials attribute it to remote working—people using home computers or laptops with vulnerable online security than office systems; malicious actors relentlessly developing their tactics to find new ways to break into enterprise networks and grasping defence evasion; persons unemployed during the pandemic getting into hacking; cloud and data corruption; digital fatigue causing negligence; etc. This study adopts a case-based approach to explore the importance of business ethics, information sharing and transparency to build an information-driven society by scouting the case of Punjab and Maharashtra Co-operative (PMC) Bank, India. PMC defaulted on payments to its depositors and was placed under Reserve Bank of India’s directions due to financial irregularities and a massive fraud perpetrated by bank officials by orchestrating the bank’s IT systems. The crisis worsened when panic-stricken investors advanced their narrative through fake news peddled via social media channels, resulting in alarm that caused deaths of numerous depositors. It exposed several loopholes in information management in India’s deposit insurance system and steered the policy makers to restructure the same, thus driving the country consistent with its emerging market peers. The study further identifies best practices for aligning employees towards ethical behaviour in a virtual workplace and the pedagogical approaches for information management in the new normal.

Prologue for the special issue on “business ethics in the virtual work environment: Challenges to educators and practitioners”

“…This is because technological transformations connect people across the world in stronger convergence beyond the narrow boundaries of nations and regions (Bohm et al, 2022 ). In this issue , Nayak & Chandiramani ( 2022 ) critically evaluated the multiple financial frauds committed by the bankers of Punjab and Maharashtra Co-operative (PMC) Bank in India, including defaulting returns to investor deposits. Through the case study, they argued the significance of teaching corporate ethics to business students and employees in the financial institutions and discussed some of the effective pedagogical approaches such as a neurocognitive model of the ethical decision-making and performance of a project premortem.…”