What is conflict of interest? Why is conflict of interest such an important issue in the financial sector? Examine (150 words)
Answers
Explanation:
A conflict of interest refers to a situation where a conflict arises for an individual between two competing interests. ... This refers to a reasonably perceived, potential or actual conflict of interest.
Examples of a conflict of interest may include: influencing the recruitment, selection, appointment or promotion of employees. impinging on employment related decisions where one employee is in a supervisory relationship to another....
Conflict of interest refers to cases where an individual or an entity has acquired multiple responsibilities which might interfere with each other and create ethical dilemmas about decision-making. Ex- The Minister of Health , if has a chain of hospital as his assets –is party to a case of conflict of interest as he might make biased policies to benefit his private affairs.
Conflict of Interest (COI) in financial sector is a critical issue since it manuevres the fate and fortune of millions. India has suffered due to COI in banking and finance ever since nationalization of bank and even before. The reason why it assumes significance are :
1. COI can birth cronyism and potential scams which is very much against our constitutional tenets of equality and fairness.
2. Financial COI often lead to huge loss of public exchequer due to mala fides of the beneficiaries. Ex- ICICI Bank case.
3. COI and its fallout effect are often detrimental to economic growth and dampens market forces. These leads to loss of million among privates assets too. (ex- Stock plunge after scam news)