Business Ethics

Habib Bank Limited

Business Ethics

Habib Bank Limited

History and Background

Habib Bank Limited was established by Mr. Ismail Habib (Late) on August 25, 1942 at
Bombay. It was the first Muslim Bank of the sub-continent. It was established with a
paid up capital of PKR 2.5 million. At an early stage, the number of its branches was
only 12.
HBL established operations in Pakistan in 1947 and moved its head office to Karachi.
Our first international branch was established in Colombo, Sri Lanka in 1951 and Habib
Bank Plaza was built in 1972 to commemorate the banks 25th Anniversary. With a
domestic market share of over 40%, HBL was nationalized in 1974 and it continued to
dominate the commercial banking sector with a major market share in inward foreign
remittances (55%) and loans to small industries, traders and farmers. International
operations were expanded to include the USA, Singapore, Oman, Belgium, Seychelles
and Maldives and the Netherlands.

Privatization of Habib Bank

On December 29, 2003 Pakistan's Privatization Commission announced that the
Government of Pakistan had formally granted the Aga Khan Fund for Economic
Development (AKFED) rights to 51% of the shareholding in HBL, against an investment
of PKR 22.409 billion (USD 389 million). On February 26, 2004, management control
was handed over to AKFED. The Board of Directors was reconstituted to have four
AKFED nominees, including the Chairman and the President/CEO and three
Government of Pakistan nominees.

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Habib Bank Limited

HBLs Mission, Vision and Values

Vision
Enabling people to advance with confidence and success .

Mission
To make our customers prosper, our staff excel and create value for
shareholders.

Values
Our values are the fundamental principles that define our culture and are
brought to life in our attitude and behaviors. It is these values that make us
unique and unmistakable. Our values are defined below:

Excellence
This is at the core of everything we do. The markets in which we operate
are becoming increasingly competitive, giving our customers an abundance of
choice. Only through being the very best in terms of the service we offer, our
products and premises - can we hope to be successful and grow.

Integrity
We are the leading bank in Pakistan and our success depends upon trust.
Our customers - and society in general expect us to possess and steadfastly
adhere to high moral principles and professional standards.

Customer Focus
We understand fully the needs of our customers and adapt our products
and services to meet these. We always strive to put the satisfaction of our
customers first.

Meritocracy
We believe in giving opportunities and advantages to our employees on
the basis of their ability. We believe in rewarding achievement and in providing
first-class career opportunities for all.

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Habib Bank Limited

Progressiveness
We believe in the advancement of society through the adoption of
enlightened working practices, innovative new products and processes and a
spirit of enterprise.

Product of HBL
As HBL have a vast number of products but our group is choosing their one the best
product Car Finance. HBL offering an excellent rate on Toyota cars and most of the
customers are buying cars through them.

Product: HBL Car Finance.

Goal: To earn 50% more profit in next year.
Objective: High-Middle Class people & Middle-Middle Class people.
Target: Salaried persons who earned more than PKR. 30,000.

CSMART Analysis of HBL Car Finance

Challenge: Challenging is making the mark-up constant for the entire period, if they
work on other brands too like Honda then they gain more and more customers because
not everyone likes Toyota.

Specific: Yes, we are aiming to earn 50% profit in upcoming year, by enhancing the
bank services and by giving some further markup discounts if the payments are made
us in less than 2 years.

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Habib Bank Limited

Measureable: We can measure our performance by external and internal customer

feedback; from this we see how many persons are willing for Car Financing from HBL.

Attainable: Yes this is attainable if we keep an eye on mark-up and constant our
down payment amount to 20% then the goal will become easy because customers are
attracted on 11% constant mark-up till the settlement of their car.

Reliable: Yes the bank is successfully earning profit and they achieve their target by
issuing more than 5 cars per month. The higher management of HBL put auto financing
officer in every branch of HBL to facilitate people, this help them to increase their sales.

Time Able: As per our group perception while discussing the Manager of Auto
Financing, she told that this goal is achievable in next 1 year.

Norms, Values & Beliefs

HBL values are the main principles that dene their culture and are brought to life in
their attitudes and behavior. Their values make them unique and unmistakable. They
intend to capitalize on the bank's heritage and values, and are determined to chart a
course, which positions this national institution amongst the nest in the world, in all
aspects. Technology will be a lead driver for them and they will do whatever it takes to
be the best in the industry. They will spend more on developing their people and they
will strive to ensure transparency and consistency in all areas of their work.

Morality
According to moral standards about right and wrong, HBL had the perception about
customers satisfaction. They have their standards that if they deliver excellent services
only then they came to meet the customers satisfaction level. They have to work on
customer attraction things also to neglect those activities which were felt hashed by
customers, for that sake they have to work on quality and continuous improvement in
their sector.

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Habib Bank Limited

Relation of Stages with HBL

Level Two: Conventional Stage:
At this stage HBL learns how to achieve customers and employees trust by
getting knowing about what is right or wrong for their organization and what kind of
steps they should make for the success. Although they get to know what the laws and
rights are made for them and having the ability to follow what right has given and what
are the basic laws are provided how accordingly we have to work on them.

Stage Three: Interpersonal Concordance Orientation:

This level shows the bank and the member working inside it how well they
promote themselves towards their work and as a manager or any other field member
they promote their skills to their customers by building strong relationship with them
through their loyalty, humbleness and the ability of their convincing behavior and the
people expectation from them.

Stage Four: Law & Order Orientation:

This level provides that as a citizen or as the member of the organization the task
they have to perform what society is expecting from us and they have to follow up those
expectation that society is expecting from them.

Problem of HBL
Few days back HBL facing problem that is ATM Card swap, at the ATM machines of
HBL Card swap was not working well and customers having a lot of troubles in it. At
HBL the customers having a problem while card swapping was when they insert their
cards the processes were working quite well but at that time customers didnt get their
money and the receipt shows that the money had been withdrawn. This problem occurs
because HBL was upgrading their ATM machines software country wide to enhance the
way of receipt generating and cash withdrawal from ATMs, with this ongoing process a
large number of customers visits their branches and asking about their money which
receipts wrongly shown that are withdrawn. In the end bank simply do that just reverse
the whole process and after 12 oclock the right amount of money is shown in the
customers bank account.

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Habib Bank Limited

Solution of the Problem

While discussing about HBL the solution of the problem is that they have to install that
new software in those days when there are national holidays like on Eid, this will help
the customer too because mostly people withdraw their required cash before Eid. So
the up gradation of this software must be held in off days to avoid customer complaints
which put bad impact on banks business. In that problem customer face an unexpected
problem that is the receipt show that you withdraw money but on the other way you
didnt get a single penny from ATM.

Utilitarianism or Rule Utilitarianism

Talking about the utilitarianism HBL just seek its own personal interest, as all the banks
laid in similar category. In this sector the firm just wants its personal benefit either the
second party face any sort of loss or trouble through their act. Bank didnt pay attention
to the problem and made customers uncomfortable from bank services. HBL simply
said that the old system has been crashed, so the bank must have to use of new
technology based software to run the ATM services efficiently.
As banks gave total importance to their customers but they simply make
themselves in safe zone by saying that these things are held and controlled by the head
office, HBL must have to work on customer first thing too and ruled out the concept of
utilitarianism because it straightly hurt the banking industry and their business as well.

Rights and Duties

In HBL the mission is to ensure the political, educational, social and economic quality of
rights of communities that we operate in and to help advocate the elimination of social
biases and hatred. The Bank pays special attention to human rights and ensures that its
policies reflect the interest of all of its members and customers without any
discrimination.
Banks had the right to change things accordingly as per State Bank rules and
sayings, but they have to negotiate with State Bank for the customer comfort because it
hurt their business. Bank have rights to change in policies but they have a duty to let the

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Habib Bank Limited

customer know about it, talking about their business type they finance car loans and
charged high markups against them but they didnt noticed about that what they are
giving to the customer instead of his/her money. Means is that car worth that much or is
it be able to sell on that much amount which customer pay against it, these few things
count so much in this and that is the duty of HBL that they must deliver all the relative
information to the customer before financing any vehicle. Although they have a right that
if someone didnt pay their money so they might take strict action against the client to
recover their amount, also HBL have that duty to make their customers happy by giving
them banking facilities with all ease. This thing help them to generate profit and grab
more and more customers.

Concept of Rights
Right to Life:
HBL gives right to life to their members and customers by giving them insurance
plans and other saving purposes which provides them the right for their life.

Right to Liberty:
It is the part of right to life where the customer has given the right to life through
insurances and saving programs this has given a freedom of action to live their life
without any difficult circumstances.

Right to Property:
Property rights are the extension of right to life and you must be able to use your
own product which is your right towards your property.

Right to Pursuit Happiness:

HBL provides you right towards pursuit of happiness to achieve values what they
need and to attain goals for their own purpose.

Right to Free Speech:

Bank gives a total right to their working members in the organization to make a
free speech what problems they are facing and even to their customers to make a free
speech for the betterment and change process for the organization and for their basic
needs.

Business Ethics

Habib Bank Limited

Types of Rights
Legal Rights:
Banks had the legal rights to take action against any of the company or person
for his/her illegal acts, banks made their legal team to file the case against the thugs.
Also the State Bank of Pakistan made some rules to make of legal teams and
nomination of legal head, HBL had strong legal team who handles their cases as this is
their right.

Contractual Rights:
HBL have the contractual rights as they have to make various contracts with
customers and as well as with employees, like Job Contract with employees and
Mortgage Contract with customers.

Moral Rights:
As per moral rights, the societies just manage to tell the banking sector that
customer first is the only policy to sustain in todays market. So talking about moral
rights HBL place boxes in all of their branches to get societys feedback, because bank
is visited by customers as well as by general public too. So they get suggestions to help
improving themselves.

Justice and Fairness

All banks have some standards that maintain the justice and fairness policy, HBL made
some rules and regulations & all employees and customers have to follow them. If
anyone found disobeying those rules and regulations then banks strictly take action
against the person and with their justice and fairness policy they treat the person as
he/she deserves. Their standard of being fair with everyone is quite good, if any
employee found guilty in anything he/she will punished with total fairness and he/she
got justice according to his/her actions. Although bank deals their customers with total
fairness as they disclose all the things related to agreement of anything to satisfy
customer. Although HBL is one of the most tax paying bank in Pakistan and they made
total justice and fairness with their country and to their people, in HBL there are some
shareholders from government but they pay the exact amount of tax which is due on
them this show the fairness policy of the firm.

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Habib Bank Limited

Types of Justice
Distributive Justice:
HBL strictly follows the distributive justice policy as they pay their taxes regularly,
do not made gender discrimination things, moreover the burden or benefits are divided
equally between employees.
Now discussing the problem and its solution under the lights of justice and
fairness is HBL having a problem of software change at their ATMs which causes
customers a lot of worries while withdrawing their money from their ATMs, and the
solution which our group suggested is that the bank has to do that thing on those days
when there are regional holidays to avoid the customer worries. Now according to
justice and fairness policy the bank didnt do the ethically right thing as they cause a lot
of discomfort to customers and their internal management surely kept a close look to it
and make things right, because the bank excuse is just not fair enough and it didnt
make justice with the customers.

Retributive Justice:
Talking about the retributive justice policy of HBL the bank made fair justice with
those employees who made mistakes and gave them punishment according to their sin.
Mostly the types of punishments are no further growth in position, salary cut or
termination. As our team interviewed their HR Manager, he tells us that there were
number of examples in the past about the fair delivery of punishment to the wrong ones.

Compensatory Justice:
The compensation is totally based on according the work contribution,
productivity and work effort. This justice mainly highlights the companys justice and
fairness policies by restoring the losses made by the specific person working in the
organization.

Ethics & Business Ethics

HBL preserving and nurturing the Banks reputation and commitment towards its core
values is of utmost importance. The Bank expects all employees to conduct themselves
in accordance with the Code of Ethics and Business Conduct that provides guidelines to
employees and the Board of Directors in their actions and serves as a declaration of the

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Habib Bank Limited

highest standards of ethics and integrity. The Code of Ethics lays down the principles
and sets the tone for proper conduct and ethical behavior in conducting business at
HBL. This Code applies to the Board and all employees of HBL in their decisions and
activities within the scope of employment, or when representing the Bank in any
capacity. The Board, the Chairman and the President have ultimate responsibility for
ensuring the legality and integrity of the Banks operations while day-to-day
responsibility lies with line management and each employee.

Rules and Laws

HBL compliance to all legal and regulatory requirements, applicable governmental laws,
rules and regulations. Conformity with all rules & regulations of the bank and
observance of all orders/directives issued by management. As an employee of the
Bank, you are prohibited from engaging in insider trading of securities and must observe
the Banks rules on personal trading in securities. HBL strictly forbids the violation of
safety and health rules and regulations. It is essential for HBLs success to comply with
laws, regulations and ethical standards that is an important element of our obligation
towards customers, stakeholders, the general public and employees, not disclose any
information about the Bank or customer unless such disclosure is compelled by law or
regulatory authorities.

Corporate Social Responsibility

HBL is committed to fullling its role as a responsible Corporate Citizen. To achieve its
CSR goals, the Bank established the HBL Foundation in 2009 with a mandate to
promote the development and well-being of the underprivileged, and improve their
quality of life. The Bank contributes annually to the Foundation and also to other worthy
causes to promote a more egalitarian society. HBL sponsored several theatre and
cultural events, the most notable being the Karachi Literature Festival and the
Childrens Literature Festival. The Banks efforts have been recognized by the Pakistan
Center for Philanthropy.
HBL has a long tradition of being associated with the sporting tradition in the
country. This year, the Bank partnered with the Azad Foundation for the uplift of children
through the promotion of football at the grass-roots level. HBL
showcased the
achievements of Pakistans Street Children Team who won the bronze medal at the

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Habib Bank Limited

World Cup in Brazil. HBL also contributed to the Shahid Afridi Foundation which
provides maternity care and other health services in remote areas of KPK.

Stakeholder Approach
In our group perception HBL is moving on stakeholder approach as they motivate other
people to take the humanity onto next level with them, as they are investing a lot in
Shahid Afridi Foundation. This thing teach that in society the bank wants everyone
establish and wants that in our country the poverty must come to its end.

Instrumental Approach:
In that approach the idea of take everyone with you the upgrade level is come in
our mind, HBL doing same in it by helping people to grow. They are investing in those
foundations which help in needy, as our country faces a lot of disasters like flood,
earthquake and terrorism. The bank wants to build the nation and made them unite and
strong again as per their responsibility towards the society.

Normative Approach:
Yes according to us banks also follow that approach too as they fulfill their duties
in every field and motivate others to do similar stuff, this bring a good gesture in society
to do good things and also to motivate others on their good deeds.

Not Applicable Things Regarding HBL

Negative Rights:
HBL is not following negative rights as there every working member has right to
interfere in the banking system in the absence of the other working member and
provided every member equal right to serve their customers in better way.

Business Ethics

Habib Bank Limited

Right to Self Defense:

There is no such kind of right is applicable in banking system it gives the right to
life but there is no such self-defense is applicable in the organization as no such kind of
rules and laws provides these rights.

Stockholder Approach:
As they are not seeking this approach which is just to earn profits and let the
society do whatever it wants, means no contribution in the society from any sort. Bank is
developing society and using Stakeholder Approach.