North Bank has been operating in Melbourne since its establishment in 1990, providing loans to a variety of clients in both metropolitan and regional areas of Victoria. Loan value can range from AUD1,000 to AUD10,000,000 depending on the need and financial standing of the client. It is a common practice at North Bank to lend a maximum amount of AUD 10,000 to individual clients with annual (before income tax) income of less than AUD 50,000 when those clients apply for a loan. Due to the impacts of covid-19 pandemic, a historically low official cash rate determined by the Reserve Bank of Australia (RBA), and to attract more clients, North Bank has decided to reduce its interest rates by 0.25% per annum since February 2021. However, as per an internal notes communicated from the bank managers to its employees, North Bank indicates that the reduced interest rates can only apply to either new clients (client who started their new loan application lodged after 1 February 2021) or clients with their loan balance, as of 1 February 2021, above AUD 10,000. Communication has since been sent to the eligible clients advising them of the change in their rates

. Required: a. Apply the managerial perspective of Stakeholder Theory, critically evaluate the decision of North Bank to reduce the interest rates of clients who are either new or are having a balance of more than AUD 10,000. (7.5 marks)

b. Applying an ethical perspective of Stakeholder Theory, advise North Bank of whether it should care about the individual borrowers who were having a balance of less than AUD 10,000 as of 1 February 2021. (7.5 marks)