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INTRODUCTION
1.1 Overview
This is the time of industrialization and commercialization of the entire service
sector. All the Companies are moving forward for the profit maximization and
the profit which they are gaining it is from the society so the companies must
take it as obligation towards the society which is to be repaid in terms of social
banking towards the benefit of society. This social Banking means to contribute
for the society while conducting the work within the boundary of ethics and that
is called Corporate Social Responsibility. The CSR practices have been started a
long time ago but in India its speed of implementation were very slow. At
present there is an increasing awareness about CSR, Sustainable Development
and Non-Financial Reporting, the credit goes to RBI in focusing the CSR
practices in Indian Banking Sector, by passing a circular in the year 2007,
December, directed banks to undertake CSR initiatives for sustainable
development.
[2] The CSR phases as its development can be divided in to four phases are as
follows:
Phase
Phase I
Key Thrust
CSR motivated by charity
Key Strategy
The oldest form of CSR was motivated by
(Till 1914)
and philanthropy
Phase II
(Till 1914-1960)
development.
independence and
influenced fundamentally by Gandhis
theory of trusteeship for consolidation and
amplification of social development.
Gandhis reform programs which included
activities that sought in particular abolition
of untouchability, womens empowerment
Phase III
(Till 1960-1980)
Phase IV
(Till 1980
onwards)
business approaches
1.4 METHODOLOGY
Research methodology is the blue print of the research which is going to be
conducted. The Research design in this study is Descriptive research design,
Random Sampling technique is used for selecting the Banks for this Study in
which the major players two from Public Sector and two from Private Sector
have been selected for the study i.e. SBI,PNB,HDFC and ICICI. The Data is
collected from secondary sources particularly from concerned Banks Annual
Report, Web sites, newsletters and data from various journals. The concept of
corporate Social Responsibility (CSR) is not a new one. But its focal point
changes with the changing requirements of business and varying social needs
Corporate Social Responsibility recognizes that business firms have not one but
many different kinds of responsibility, including economic and legal
responsibility. In 1960, CSR surfaced as an attempt to link business with society.
The underlying belief in this era was to apply the resources in a socially
responsible manner i.e., the promotion of social welfare along with the
economic development. The main argument was to employ economys means of
production in such a way that production and distribution could enhance total
socio-economic welfare.
Kalyan
Chaudhury,
Sanjay
Kanti
Das,
Prasanta
Kumar
CHAPTER 2
CSR INITIATIVES BY BANKING SECTOR
2. 1Major Areas of CSR Along With Their Expenditure on CSR
Activities
(a) State Bank of India:
Corporate Social Responsibility has always been a part of the State Bank of
India covering various social, environmental and welfare activities. Their pledge
towards CSR is reflected in their CSR vision statement (Serving the
Community Everywhere)
The comparative chart of CSR spends for the last three years is as under (in
crores)
CSR Activities
National Donations
2009-2010
5.15
2010-2011
2.00
2011-2012
5.50
direct 14.57
22.44
65.68
19.72
22.44
71.18
&
other
activities
Total CSR spend
For the first time in the last decade, the
budget
For
CSR
spend
(normal
surpassed
even
though
the
By analyzing the table no.1 we can see that in the year 2009 the expenditure of
bank in different CSR activities were 19.72 crores which is increased in the year
2012 up to 71.18 crores ,which is the good symbol for the Indian Economy.
CSR Activities
National Donations
Supporting Education
Supporting Healthcare
Assistance to underprivileged
Amount (` in crores)
5.50
38.33
15.03
5.37
Supporting Culture
Research & Development
Environment Protection
Other projects
Total
1.75
3.75
0.67
1.38
71.18
ICICI Foundation
Amount (Millions)
10
12.28
9.56
3.00
6.52
2.08
Oppressed
Vikramshila Education Resource Society
Centre for Learning Resources
Janagraaha Education Support Organisation
2.00
1.81
1.63
0.90
1.10
26.59
Dignity Foundation
25.00
Bhavishya Alliance
1.61
7.00
TOTAL
112.93
CHAPTER 3
REPORTING OF CSR PRACTICES BY INDIAN
FINANCIAL INSTITUTIONS
The concept of CSR reporting has been described by different scholars in
different ways.CSR reporting calls for reflection of corporate ethical practices,
transparency, sensitivity to the environment issues, social commitment and
labour welfare practices of business houses. It is observed from Kamayogs CSR
rating (2009) that most of the Indian banks do not mention CSR on their annual
reports or on websites.
CSR rating of Indian financial Institutions
level(0-5)
No. of banks/fis
Name. of banks/fis
Level 0
Level 1
3
6
Level 2
15
Bank
Allahabad Bank,Andhra Bank, BOB,Bank of India,
Bank of Maharashtra Bank,IDBI bank,Bank of
Rajasthan,Corporation Bank,Federal Bank, HDFC
,Indian overseas,State Bank of Bikaner,State Bank of
Level 3
11
Bank of India.
1
Yes bank
Nil
Nil
Source: Karmayogs CSR rating, 2009.
Level 4
Level 5
CHAPTER 4
PRESENT STATUS OF CSR IN BANKING
New companies bill is a step forward: Clause 135- corporate social
responsibility.
The new Companies Bill seeks to make it mandatory for companies of a certain
financial strength to spend at least 2% of their average net profit over three years
on corporate social responsibility. The Bill, which would replace the nearly sixdecade old Companies Act, 1956, was cleared by the Rajya Sabha on 8 August
while it had received the Lok Sabha nod in December last year. As per the new
norms, the two per cent spending on CSR is not mandatory but reporting about it
is mandatory. In case, a company is unable to spend the required amount, then it
has to give an explanation for the same. The CSR norms, that would come into
effect once the President gives his assent, would be applicable to companies
having either net worth of Rs 500 crores or more; turnover of Rs 1,000 crores or
more; or net profit of Rs 5 crores or more.
RBI revises bank KYC guidelines, advises new set of norms on July 1 2013
In a bid to strengthen its safeguards against money laundering, the Reserve Bank
of India (RBI) issued the master circular revising certain guidelines related to
bank Know Your Customer (KYC) policy. It suggested creating Unique
Customers Identification Code (UCIC) while bringing changes in new account
opening process .On July 16, 2013, RBI fines 22 banks Rs 50cr for violation of
know your customer which includes SBI, PNB and 20 more lending banks.
CHAPTER 5
CSR PRACTICES IN INDIAN BANKS
5.1 CSR PRACTICES IN BANKS
Banking in India originated in the last decades of the 18th century with the
establishment of General Bank of India in 1786 and the Bank of Hindustan
set up in 1870 (however both of the banks are now defunct). The oldest
bank existing in India is the State Bank of India and the apex regulatory
authority of Indian banking sector is Reserve Bank of India. At present, the
commercial banking structure in India consists of Scheduled Commercial
Banks & Unscheduled Banks. Since independence, banking in India has
evolved through four distinct phases:
Foundation phase (1950s till the nationalization of banks in 1969),
Expansion phase (mid-60s to 1984),
CSR Practices in Indian Banking Sector 857
Consolidation phase (1985 to 1991) and
Reforms phase (since 1992).
In recent years an attempt has been initiated to ensure socially responsible
behavior of banking sector in a more organized manner. The CSR in Indian
Banking Sector is aimed towards addressing the financial inclusion,
providing financial services to the unbanked or untapped areas of the
country, the socio-economic development of the country by focusing on the
activities like, poverty eradication, health and medical care, rural area
development, self employment training and financial literacy trainings,
infrastructure development, education, and environmental Protection etc.
RBI also insisted upon taking measures for sustainable development of
economy through realizing the dire necessity of CSR. Reserve Bank of India
(2007) stated that CSR entails the integration of social and environmental
concerns by companies in their business operations and also in interactions
with their stakeholders. The major thrust areas for CSR practice in Indian
banks are common in public sector and private sector banks. These areas
include children welfare, community welfare, education, environment,
healthcare, poverty eradication, rural development, vocational training,
women's empowerment, protection to girl child and employment.
INITIATING
CSR
PROGRAMS
IN
BANKS/
FINANCIAL
INSTITUTIONS:
Embracing CSR has to begin with decision at the highest corporate level
(board of directors), and adoption of action programs and performance targets
chosen in consultative processes involving the internal and external
stakeholders concerned. A first time CSR program of a bank or financial
institution would be likely to include action plans for:
i)
ii)
organization;
Engaging with borrowers in scrutiny of the environmental and social
impacts of their proposed undertakings (along the PKSF 2004 or
Equator Principles 2006 guidelines, as relevant);
iii) Reaching out with financial services to the less well off population
segments of the community (with own initiatives along lines indicated at
paragraph 1.2 above); and
iv) Community investments by way of donations to initiatives of Civil
Society Organizations (CSOs), NGOs and institutions involved in health,
education and culture; for social and environmental improvement
including nutrition, health and education in the disadvantaged
population segments (most banks and financial institutions in
Bangladesh already have significant outlays of such charitable expenditures,
these can fit in appropriately as elements in the new structured CSR
programs).
CHAPTER 6
THE FUTURE OF CORPORATE SOCIAL
RESPONSIBILITY
Companies today are increasingly sensitive about their social role. The
companies not only concentrate on how they will position their product or how
they will sell it but also they have a social strategy because they have started
feeling that brands are built not only around good quality of the product; but also
around emotions and values that people ascribe to those products
All of these trends mean that businesses need to manage their environmental
and social impacts much better: corporate responsibility has to cease being a
bolt-on to business operations; and instead be built-in to business purpose and
strategy. This involves a clear link to business values and culture; strong
leadership form the top; and the active engagement of stakeholders.
Potential benefits of implementing a CSR approach
Key potential benefits for firms implementing CSR include:
Better
instead.
Demands for greater disclosure
6. Supplier relations
As stakeholders are becoming increasingly interested in business affairs,
many companies are taking steps to ensure that their partners conduct
themselves in a socially responsible manner. Some are introducing codes of
conduct for their suppliers, to ensure that other companies' policies or practices
do not tarnish their reputation.
Some of the positive outcomes that can arise when businesses adopt a
policy of social responsibility include:
Company benefits:
Improved financial performance;
Lower operating costs;
Enhanced brand image and reputation;
Increased sales and customer loyalty;
Greater productivity and quality;
More ability to attract and retain employees;
Reduced regulatory oversight;
Access to capital;
Workforce diversity;
Product safety and decreased liability.
life-cycle
assessment
and
costing,
environmental
For instance,
villagers were encouraged to produce more vegetables or keep cattle for milk,
with the company providing the start-up money, the knowledge and the
marketing infrastructure that ensured the extra produce got to town. The
villagers were encouraged to take the risk and try their hand at new farming
activities because of the assurance of a dependable market and a steady
income. That changed over time to community outreach: reaching out to the
communities around company plants or offices, and providing amenities that
were lacking. Companies supplemented facilities in schools or hospitals, helped
women earn extra income through sponsorship of, say, sewing machines or
community centers which, apart from generating income, promoted adult
literacy and family welfare activities. With the growth of environment
consciousness in the 1960s, companies felt the need to redeem themselves for
some of the damage done. They got involved in forestation, water conservation
and similar projects. The concept of corporate social responsibility (CSR) thus
evolved from philanthropy to a more elaborate concept that encompassed the
environment, employee relations, corporate governance and engaging with the
community. The current understanding of CSR also attempts to deploy a
companys core competencies to help address societys problems. Examples of
this approach abound, and one standout example is TCS, which has used its
expertise in information technology to help communities in different parts of
India help themselves. TCS has developed a database for Child Line, which
supports children in distress in 54 centres in India, all using volunteers from
among its employees; it has also designed and implemented a computer-based
functional literacy project, a unique idea that enables adults to learn to read
using low-end computers and a breakthrough software solution within 30 to
40 hours, over two-three months. Similarly, NIIT has used its IT expertise for
its hole in the wall experiment, where children from slums learn to use
computers with a touch screen. Cut from the same cloth is ITCs muchcelebrated e-choupals, which help farmers check prices in Indian and global
markets
before
going
to
the
marketplace
with
their
produce.
engage in to look good. Effective CSR today is that which relates directly to the
givers core competencies and offers real value, not just philanthropy. It is no
longer considered good for business, but simply good business. Because when
you give back to the society you operate in, you become truly embedded in that
society, rather than being perceived as seeking profits alone
CONCLUSION
At present the Banking Sector performing their banking services more
effectively in comparison with the past and also started working towards social
banking that is Corporate Social Responsibility. Maximum number of banks
whether related to private sector or public sector highly performing CSR
activities as per their priority but if we look towards the CSR reporting then we
can see that most of the banks are still not disclosing their amount for such
initiatives in their websites. After the involvement of RBI the CSR becomes the
important part of Banking Sector but still more regulations and new policies are
required to implement the concept of CSR in Indian Banking Sector .RBI should
made some criteria to distinguish between the banks conducting CSR practices
and those not conducting ,on the bases of their involvement in social banking
and some percentage must be set for spending on CSR activities by all the
established Banks and a proper monitoring is required by a committee on the
working of Banks so that the Banks work for their profit along with contributing
towards the society because Corporate social responsibility is just not the charity
but a practical implementation of ethical ideas towards the society. Banking
sector in India is showing interest in integrating sustainability into their business
models but its CSR reporting practices are far from satisfaction. There are only a
few banks which report their activities on triple bottom line principles. As a
matter of fact, the standards for rating CSR practices are less uniform in
comparison to that for financial rating. This leads to problem in comparison of
corporate houses and determining the CSR rating. The study found out that
among the reporting banks also, some banks are making false gestures in respect
of their efforts for socioenvironmental concerns. Most of the Banks use CSR
practices as a marketing tool and many are only making token efforts towards
CSR in tangential ways such as donations to charitable trusts, NGOs,
sponsorship of events, etc. Very few banks have a clearly defined CSR
philosophy. Mostly banks implement CSR in an ad-hoc manner, unconnected
with their business process and dont state how much they spend on CSR
activities. Further voluntary actions are required to be taken by the financial
bodies to ensure the socio-environmental feasibility of projects to be financed.
Indian banking sector must also portray their socially responsible behavior.
BIBLIOGRAPHY
Books
S. K. Chaudhury, S. K. Das and P. K. Sahoo, Practices of corporate social
responsibility (CSR) in banking sector in India
Website
Karmayog Report.(2009).
Retrived from http://www.karmayog.org/csr2009
www.smeworld.org/story/special-reports/corporate-social-rep-csr-activityhistory-india.php
http://www.moneycontrol.com/news/business/rbi-revises-
bank-kyc-guidelines-advises-new-setnorms_908856.html