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Code of Conduct for Board of Directors and Senior Management


The Karnataka Bank Ltd is committed to conducting its business in accordance with the applicable laws, rules and regulations and with highest standards of corporate Governance guided by sound ethical values. This code is intended to provide guidance and help in recognizing and dealing with ethical issues, provide mechanisms to report unethical conduct, and to help foster a culture of honesty and accountability. Each Director and officer in senior management cadre** (hereinafter called designated officers) is expected to comply with the letter and spirit of this Code.

The designated Officers must not only comply with applicable laws, rules and regulations but should also promote honest and ethical conduct of the business. They must abide by the policies and procedures that govern the conduct of the Bank's business. Their responsibilities include helping to create and maintain a culture of high ethical standards and commitment to compliance, and to maintain a work environment that encourages the stakeholders to raise concerns to the attention of the management.

This code does not attempt to describe all potential problem areas that could develop, but some of the more common problems are described below:

Conflicts of Interest - A conflict situation can arise:

a. When a designated officer takes action or has interests that may make it difficult to perform his or her work objectively and effectively,

b. The receipt of improper personal benefits by a member of his or her family as a result of one's position in the Bank,

c. Any outside business activity that detracts an individual's ability to devote appropriate time and attention to his or her responsibilities with the Bank,

d. The receipt of non-nominal gifts or excessive entertainment from any person/company with which the Bank has current or prospective business dealings,

e. The designated officer should be scrupulous in avoiding 'conflicts of interest' with the Bank. In case there is likely to be a conflict of interest, he should make full disclosure of all facts and circumstances thereof to the Board of directors or any Committee / officer nominated for this purpose by the Board and a prior written approval should be obtained.

Honest and Ethical Conduct: The designated officers shall act in accordance with the highest standards of personal and professional integrity, honesty and ethical conduct in all its business. They shall act and conduct free from fraud and deception. Their conduct shall conform to the best-accepted professional standards of conduct.

Corporate Opportunities – The designated officers owe a duty to the Bank to advance its legitimate interests when the opportunity to do so arises. They are expressly prohibited from taking for themselves personally, opportunities that are discovered through the use of Bank's property, information, or position and pursue any activity which conflicts with the broader interest of the Bank.

Confidentiality - The designated officers shall maintain the confidentiality of confidential information of the Bank or that of any customer of the Bank to which Bank has a duty to maintain confidentiality, except when disclosure is authorized or legally mandated. The Confidential information includes all non-public information that might be of use to competitors or harmful to the Bank. The use of confidential information for his/her own advantage or profit is also prohibited.

Fair Dealing - Each designated officer should deal fairly with customers, suppliers, and competitors. They should not take unfair advantage of anyone through manipulation, concealment, abuse of confidential, or secret information, misrepresentation of material facts, or any other fair dealing-practices.

Protection and Proper Use of Bank's Assets - All designated officers shall protect assets of the Bank and ensure its efficient use. Theft, carelessness, and waste of the Bank's assets and property have a direct impact on the profitability of the Bank. Bank's assets should be used only for legitimate business purposes.

Compliance with Laws, Rules, and Regulations: The designated officers shall comply with all applicable laws, rules, and regulations. Transactions, directly or indirectly, involving securities of the Bank should not be undertaken without pre-clearance from the Bank's compliance officer.

Duties of Independent Directors:

An Independent Director shall –

i) Undertake appropriate induction and regularly update and refresh his skills, knowledge and familiarity with the Bank;

ii) Seek appropriate clarification or amplification of information and where necessary, take and follow appropriate professional advice;

iii) Strive to attend all meetings of the Board of Directors and of the Board committees of which he is a member;

iv)Participate constructively and actively in the committee of the Board in which he is a chairperson or member;

v)Strive to attend the general meetings of the Bank;

vi) Where he has concern about the running of the Bank or a proposed action, ensure that these are addressed by the Board and to the extent that they are not resolved, insist that his concerns are recorded in the minutes of the Board meeting;

vii) Keep himself well informed about the Bank and the external environment in which it operates;

viii)Not to unfairly obstruct the functioning of an otherwise proper Board or committee of the Board;

ix) Pay sufficient attention and ensure that adequate deliberations are held before approving related party transactions and assure himself that the same are in the interest of the Bank;

x) Ascertain and ensure that the Bank has an adequate and functional vigil mechanism and to ensure that the interests of a person who uses such mechanism are not prejudicially affected on account of the such use;

xi) Report concerns about unethical behaviour, actual or suspected fraud or violation of the Bank`s Code of Conduct;

xii) Acting within his authority, assist in protecting the legitimate interests of the Bank, shareholders and employees;

xiii)Not disclose confidential information, whether during his tenure or thereafter including commercial secrets, technologies, advertising and sales promotion plans, unpublished price sensitive information, unless such disclosure is expressly approved by the Board or required by law.

xiv) Shall not make press media statements on his own without prior written permission from the Board/Managing Director.

Compliance with Code of Conduct:

If any officer /employee who knows of or suspects of a violation of applicable laws, rules or regulations or this Code of conduct, he/she must immediately report the same to the Board of Directors or any designated person/committee thereof. Such person should as far as possible provide the details of suspected violations with all known particulars relating to the issue. The Bank recognizes that resolving such problems or concerns will advance the overall interests of the organisation that will help to safeguard the Bank's assets, financial integrity and reputation.

Violations of this Code of Ethics will result in disciplinary action. The Board or any Committee/person designated by the Board for this purpose shall determine appropriate action in response to violations of this Code of Ethics.

Interpretation of Code - Any question or interpretation under this Code of Ethics and Business Conduct will be handled by the Board or any person /committee authorised by the Board The Board of Directors or any designated person/committee has the authority to waive compliance with this Code of business conduct for any designated officer of the Bank. The person-seeking waiver of this Code shall make full disclosure of the particular circumstances to the Board or the designated person/ committee.

** Senior Management for the purpose of this code include Chief General Manager and the General Managers and heads of all departments in Head Office.

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