VIVEK COLLEGE OF COMMERCE

Chapter1. ROLE OF CSR IN BANKING

CONCEPT OF CSR

Corporate social responsibility (CSR) is an expression used to

describe what some sees as a companys obligation to be sensitive to
the needs of the stake holders in its business operations.

CSR is closely linked with the principles of Sustainable

Development in proposing that enterprises should be obliged to
make decisions based not only on the financial / economic factors but
also on the social and environmental consequences of their activities.

Corporate executives and employees in turn have strong incentives to

internalize the corporations statutory obligations to maximize profits,
sometimes to the extent that they abdicate their individual moral and
ethical obligation as human beings.

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NEED FOR CSR

Banks need to be more socially responsible as for the service

sector organization business with the society has to be
predominantly in the highest denomination of social responsibility,
and more importantly banks are special and high leveraged
business.

They have a large number of creditors and failure of one bank can
lead to the failure of many other banks as the customers use faith.

Banks do not exist in a vacuum. They make a large contribution to

the countrys GDP growth, meet the demand for the growing
middle class contribute to infrastructure spending and reach out to
the semi urban and rural areas.

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Environment

Pollution control Restoration or protection of environment

Conservation of natural resource

Energy

Conservation of Energy in production and marketing

operations. Efforts to increase the energy efficiency of
products. Other energy saving programs.

Fair Business Employment and advancement of women and minorities.

Practices

Employment and advancement disadvantaged individuals,

Support For minority owned business.

Human

Promotion of employee health and safety. Employee training

Resources

and development. Remedial education programs for

disadvantaged Employee Career Counseling

Community

Donations of cash, products, services or employee time.

Involvement

Sponsorship of public health projects. Support of education

and the arts. Support of Community recreations programs.
Co-operation in community projects

Products

Enhancement of product safety. Sponsorship of product

safety education programs. Reduction of polluting potential
of products. Improvement in nutritional value of product.
Improvement in packaging and labeling

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Following factors encouraging companies to be socially

responsible:
1. Changing consumer and employee expectations

2. Enhancing corporate reputation

3. Increasing legislation

4. Motivate Loyalty in staff

5. Increasing influence of NGOs
6. The knock on effect of corporate accounting scandals such as Enron
and World Com

7. A pervasive media in search of stories

8. Happy restful sleep and hassle free life for the people working in
the business

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NECESSITY OF CSR IN BANKS

Banks are financial institution were customer money and finds are being
managed by banks with a assurance of enhanced benefits
Quality service and security, if customers are to retain their faith in the
bank the banks should provide them with quality service. This is a most
important major social obligation toward customers.

Failure to provide quality service is nothing but breach of basic social

and legal responsibilities as rightly said by Mahatma Gandhi

A customer is the most important visitor on our premises.

We are dependent on him. He is not an interruption in our work. He is
the purpose of it. He is not an outsider in our business. He is part of it.
We are not doing him a favor by serving him. He is doing us a favor by
giving us an opportunity to do so.

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OBJECTIVE OF RESEARCH
To find out the potential for implementing a customer friendly
practices in banks.
To identify the areas where IT can help to improve the service
quality and work culture.

To identify what are the ways and means to install IT based

services to enhance CRM practices.
To assess an overall impact of IT on development of a customer
friendly culture.

HYPOTHESIS
Fulfilling CRM obligation and enhancing customer satisfaction is
the social responsibility of the banks.
IT plays an important role in development of healthy CRM
practices.
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POTENTIALS FOR IMPLEMENTING CUSTOMER

FRIENDLY PRACTICES

To offer right advice regarding customers requirement regarding

various banking services.

Fulfillment of KYC norms to inform, awaken and develop a sense

of being right citizens among customers.

To inform the customers as to what are their duties as a disciplined

bank customer.

To publish the customer charter of rights and duties and awake

them as to how they can avail the bank services in the efficient
manner.

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IT IS AN INSTRUMENT OF SYSTEM CHANGE

Development of information kiosk to provide right and timely
information.

Promotion of customer friendly and web enabled services.

Development of a paperless work system.

Touch screen single windows to settle doubts and queries of

customers.

Offering a web based dispute settlement mechanism.

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WAYS AND MEANS TO INSTALL IT BASED SERVICES

TO ENHANCE CRM BASED PRACTICES

The areas where web enabled and IT based services can be provided to
the customer,

Mobile banking for prompt connectivity, information and

deliverance.
Rapid expansion of ATM network in the rural area.
Providing financial literacy program through computer and web
based services.
Providing market intelligence and market information to specific
segment in relation to banking and financial sectors.
Development of depositors, interest protection program.
Dissemination of banking and financial information.
Grievance redressed system.
Deposit insurance and deposit safety
Development of credit and loan information systemDesigning
customized product and services.
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JUSTIFICATION OF HYPOTHESIS
In the present discussion the researcher has provided with
a variety of area where customer service and customer care
happens to be a most important aspect of bankers business.

Survival is the key responsibility of every business as

Every business is a social custodian of economic resources
therefore the true and primary social responsibility of bank
lies toward customer which justifies the presumption of the
current paper.

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CSR IN HDFC BANK LTD

1. Housing Development Finance Corporation Limited (HDFC)

2. HDFC bank was incorporated in August 1994 & currently
Has a nationwide network of 4014 Branches & 11,766 ATM.
3. HDFC was ranked 32nd among India's most trusted brands.

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2. PREAMBLE
CSR covers the entire process by which an organization approaches,
defines and develops its relationships with stakeholders for the common
good, and demonstrates its commitment in this regard by adoption of
appropriate strategies and projects. Thus CSR is not charity or mere
donations but a way of going beyond business as usual, creating shared
value and contributing to social and environmental good.

3. PURPOSE
HDFC Bank is committed to identifying and supporting
Programs aimed at:
Developing and advancing the community and in particular, those
at the bottom of the pyramid who are unequally endowed/enabled,
and also

Reducing negative impact of its operations on the environment

This policy will serve as a guiding document to help identify, execute

and monitor CSR projects in keeping with the spirit of the policy.
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The CSR policy would function as a self-regulating mechanism for the

Banks CSR activities and enable adherence to laws, ethical standards,
and international practices in this regard.

4. POLICY STATEMENT / VISION

The Banks CSR mission is to contribute to the social and economic
development of the community.
Through a series of interventions the bank seeks to mainstream
economically, physically and socially challenged groups and to draw
them into the cycle of growth, development and empowerment. At the
core of this is its commitment to reach out to marginalized communities
through its Sustainable Livelihood Initiatives.

The Banks strategy is to integrate its activities in community

development, social responsibility and environmental responsibility and
encourage each business unit or function to include these considerations
into its operations.

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5. SCOPE
This policy will apply to all projects/programs undertaken as part of the
Banks Corporate Social Responsibility activities and will be developed,
reviewed and updated by reference to relevant codes of corporate
governance and international standards or best practices. This policy is
also in line with the
CSR Rules (Sec.135 of Companies Act, 2013).

6. GOVERNANCE
Overall governance of CSR and approving of the CSR Policy will be the
responsibility of the CSR Committee of the Board. The CSR Department
of the Bank will be responsible for administering and executing the
policy. As the Banks CSR activities evolve further, the policy may be
revised with the approval of the CSR Committee of the Board.

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7. CSR COMMITTEE
The Bank will institute least three times in a year. The following shall be
the terms of reference of the Committee. A CSR Committee of the
Board consisting of three or more directors including at least one
Independent Director. The Committee will meet at
To formulate the Banks CSR strategy, policy and goals
To monitor the Banks CSR policy and performance
To review the CSR projects/initiatives from time to time
To ensure legal and regulatory compliance from a CSR
Viewpoint
To ensure reporting and communication to stakeholders on
The Banks CSR projects/initiatives
Consistent with the above, the CSR Committee of the Board currently
has the following members:
1. Mr. Bobby Parikh (Independent Director)
2. Mr. Perth Data (Independent Director)
3. Mrs. Reno Kerned

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8. CSR BUDGET
The overall amount to be committed to CSR will be approved by the
Board as part of the Banks overall Annual Budget/Plan. Within the
budgeted amount, specific CSR Initiatives / projects will be approved in
line with the process approved by the CSR Committee of the Board. All
projects undertaken by the Bank will be approved / ratified by the Banks
CSR Committee.

9. SUPERVISION
The Banks CSR activities will be driven by a dedicated CSR team
under the guidance and support of senior functionaries, in particular, the
DMD/MD. The CSR Committee and CSR Department would play a
significant role in ensuring that the CSR policy is embedded across the
Banks operations and the CSR initiatives are in line with the policy.

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10. IMPLEMENTATION
The Bank will undertake CSR projects which are closely linked with the
principles of sustainable development and shared value, with the
involvement of local institutions and the community at large.

The CSR Department would assist in implementation and monitoring of

the CSR projects/initiatives. The actual implementation of various
initiatives will be broad-based with the involvement of various Banks
employees/units or through implementing agencies like NGOs, Trusts,
Societies, Section 8/ Section 25 companies, DST certified incubation
centers or through collaborative projects with other corporate. In case of
the implementing agency being a not for profit organization, the entity
should typically have not less than three years of experience in
implementing projects in the respective area. The implementation
partner will also be screened based on the Banks internal screening
criteria to ascertain the entitys credibility and its ability to execute the
proposed projects.

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11. DISBURSEMENT
The disbursal of funds will be either in trenched drawdown form or onetime payment depending on the nature and requirement of the project.
The terms, conditions and timing of disbursement will be discussed and
agreed to with the CSR Department and project teams, and will typically
form part of the Memorandum of Understanding with the entity
implementing the project.

12. MONITORING
The CSR Committee will ensure a transparent monitoring mechanism
for ensuring effective implementation of the projects / programs/
activities proposed to be undertaken by the Bank.
The CSR Department would have the responsibility of monitoring
approved projects and funds disbursals for such projects. Monitoring
mechanisms will include visits, meetings and progress/status reporting
by the project teams. The Banks CSR activities will be reviewed by the
CSR Committee. A system will be put in place to maintain a transparent
monitoring and reporting mechanism across all the stakeholders
involved in the CSR activities of the Bank, as desired by the CSR Rules
(Section 135, Companies Act, 2013)

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13. CSR PROGRAMS / PROJECTS

The Bank is highly supportive of the involvement of its employees in its

CSR initiatives and in community activities/charities of their choice, and
will therefore proactively engage with employees and other key
Stakeholders to solicit their active involvement in the Banks CSR
programs.

To provide a focused and structured approach to the program, the Bank

will focus its support and CSR spends on specific pre-determined causes
and areas of intervention as outlined in the Annexure to the policy. The
CSR Department would put up to the Committee appropriate details of
proposed projects including implementation year, modalities of
execution in the areas/sectors chosen, implementation schedules for the
same etc. The CSR Committee will consider and approve (in line with
the guidelines given below), CSR projects/programs to be undertaken
during the year.
a) The Bank will ensure that its CSR projects are none
Discriminatory in nature and do not have any restrictive
Political or religious affiliations.

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b) The programs/ projects will be within the areas recommended

/ listed by the CSR Committee and mentioned in the Policy.

c) The programs/ projects will be beyond business as usual.

d) The programs/projects will be implemented within the

Country and preferably in areas where the Bank has its
Presence.

e) The Bank will actively consider Programs/Projects that have

Also those where employees are directly involved through
Volunteering efforts.

f) Programs/Projects that integrate business models with social

And environmental priorities and processes in order to create
Shared value will be encouraged.

g) The Bank will consider Programs/Projects closely linked with

The principles of sustainable development.
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h) Programs/Projects should not be exclusively for the benefit of

Employees of the company or their family members or those
That are conducted /undertaken exclusively in pursuance of
The normal course of business.

I) any surplus, generated out of the CSR activities of the Bank,

Will be ploughed back to the CSR Initiatives of the Bank.

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14. REPORTING
Our Origins
The housing development finance corporation limited (HDFC), founded
in 1977, and is Indians largest mortgage company. It was amongst the
first companies to receive an In-Principle approval from the reserve
bank of India (RBI) to set up a private sector bank, thus leading to the
establishment of HDFC bank limited in august 1994. Headquartered in
Mumbai, we began operations as a scheduled commercial bank in
January 1995 & have today become Indias second largest private bank
by balance sheet.

OUR JOURNEY

HDFC bank incorporated

As a scheduled

Times bank limited

merged with HDFC bank

Commercial bank

Amalgamation of
Centurion bank of
Punjab with
HDFC bank

1995

2000

2008
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At HDFC bank, our mission is to be a World class Indian Bank in

terms of product offerings, technology, service levels, risk management
and compliance. We are committed to contribute towards inclusive
growth, reaching out to the bottom-of-the pyramid segments by offering
development & financial support.

Our objective is to build sound customer franchises across distinct

businesses, to be the preferred provider of banking services for
customers, and to achieve healthy growth in Profitability, consistent with
our risk appetite. Coupled with efforts towards social responsibility and
environmental preservation, we are driven by the highest levels of
ethical standards, professional integrity, and corporate governance and
regulatory compliance.

Since inception, our business philosophy has been guided by the core
values of people, customer focus, operational Excellence and product
leadership and these core values fuelled our growth over the years. In
FY 2013-14, we adopted and established Sustainability as the fifth core
value that defines our business.

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OUR CORE VALUES

CUSTOMER
FOCUS

PEOPLE

OPERATIONAL EXCELLENCE

PRODUCT
LEADERSHIP

SUSTAINABILITY

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Our Products and Services

We cater to a wide range of banking services covering commercial and
investment banking on the wholesale side and transactional/branch
banking on the retail side. We serve customers through three key
business segments which comprise mainly of:

Wholesale Banking
With superior product delivery, service levels and strong
customer orientation, we have made significant inroads into the
banking consortia of a number of leading Indian corporate
including multinationals, companies from the domestic business
houses and prime public sector companies and are recognized as
a leading provider of cash management and transactional
banking solutions to corporate customers, mutual funds, stock
exchange members and banks.

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Commercial

Working Capital, Term Loans, Bill / Invoice

Banking

discounting, Forex & Derivatives, Wholesale,

Deposits, Letters of Credit, Guarantees

Transactional Banking

Cash Management, Custodial Services,

Clearing Bank Services, Correspondent
Banking, Tax Collections, Banker to Public
Issues

Investment Banking

Debt Capital Markets, Equity Capital Markets,

Project Finance, M&A and Advisory

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Retail Banking
Our Retail Banking business provides customers with a full range of
financial products and banking services, giving them a one-stop window
for all their banking requirements. The products are backed by world
class service and delivered to customers through our growing branch
network, as well as through alternative delivery channels like ATMs,
Phone Banking, Net Banking and Mobile Banking.
Loan Products

Auto Loans, Personal, Loans Home Loans, Vehicle Finance,

Agriculture and Tractor Loans, Credit cards, Loans against
Gold/Securities, Construction Equipment Finance,
Education Loans, SHG Loans, Kisan Gold Card

Deposit

Savings Accounts, Current Accounts, Fixed/Recurring

Products

Deposits, Corporate Salary Accounts

Other Services

Depository Accounts, Mutual Fund Sales, Private

Banking, Insurance Sales (Life, General), NRI Services,
Bill Payment Services, POS Terminals, Debit Cards

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Treasury
With the liberalization of the financial markets in India, corporate need
more sophisticated risk management information, advice and product
structures. Along with such services, fine pricing on various treasury
products is provided through our Treasury business.

Foreign Exchange

Debt Securities

Equities

Derivatives

Asset Liability
Management

Statutory Reserve
Management

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Our Approach - Healthy Growth and Low Risk

Growing economy/

Nationwide network,

banking industry,

expanding semi urban and

gaining market share

rural footprint

Strong risk

Wide product range

management, Focus

and multiple customer

on asset quantity

segments

Leveraging organic and Inorganic

growth opportunities

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HIGHLIGHTS
Net Profit :
Rupees 10,216 crore. An increase of 20.5% compared to the previous year.
Balance sheet size :
Rupees 590,503 crore. An increase of 20.1% compared to the previous year.
Total Deposits :
Rupees 450,796 crore. An increase of 22.7% compared to the previous year.
Total Advances :
Rupees 365,495 crore. An increase of 20.6% compared to the previous year.
Capital Adequacy Ratio :
16.8%
Tier I capital Ratio :
13.7%
Gross Non- Performing Assets :
0.93% of Gross Advances
Network :
Branches: 4,014
ATMs: 11,766
Cities/Towns: 2,464

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OUR REACH

14000

12000

11766

11256
10000

10473

8913

8000

11-12 Year
12-13 Year
13-14 Year
14-15 Year

6000

4014

4000

3403

3062
2171

2000

2464

1845

2544
1399
0
Branches

ATMs

cities/towns

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PRADHAN MANTRI JAN- DHAN YOJANA

HDFC bank has been fulfilling the financial inclusion mandate of the
Pradhan Mantri Jan-Dhan Yojana (PMJDY). It is among top private
sector banks both in terms of account value and the number of accounts
opened under the scheme.

PMJDY was launched on August 28, 2014 by the honorable Prime

Minister to bring about total financial inclusion. The scheme relies
heavily on technology to provide every unbanked house hold access to
various banking services such as savings accounts within a set
timeframe.

Under the scheme, the bank was allocated 1499, urban wards & 453 subservices areas (SSA) in 27 states, including 2 union territories. In the
initial step, the bank completed a house-to-house survey covering all
regions end of last year, well within the prescribed deadline of
December 26 set by the department of financial services (DFS). In a
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landmark event, it completed account opening for 100% unbanked

households by January 26, 2015, within the schemes stipulated deadline.

The bank relies on its technological edge to fulfill the schemes

objectives. In a first, it has deployed Micro ATMs, allowing both
Aadhaar & Rupay PIN based transactions on the same machine. Each
correspondent point allows direct opening of accounts through Micro
ATMs compliant with UIDAL specifications. The E-KYC facility is also
provided at these points.

Underscoring the banks achievements under PMJDY, the government

of Madhya Pradesh in December 2014 recognized it as the Best
Performing bank for overall performance. In October 2014, the
Ministry of finance honoured the Yamunanagar branch as the Best
Branch for total deposits mobilized under PMJDY.

The importance of financial inclusion on a countrywide scale cannot be

overemphasized. The bank is well placed to meet the schemes
objectives through its prime technologies and a nation-wide network.
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Following are the diagrams shows

PROFIT AFTER TAX (rupees in crore)
12000
2006

10000

2007
2008

8000

2009

10216

6000

8478

2011

4000

2012

6726
2000

2010

871

1141

3926

1590 2245 2949

2013
2014

5167

2015

DIVIDEND PER SHARE (Rupees)

8.0

6.9

5.5

6
5

3.3

4
3
2
1

1.1

1.4

1.7

2.0

2.4

4.3

2006
2007
2008
2009
2010
2011
2012
2013
2014
2015

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EARNING PER SHARE (Rupees)

45
40
2006

35

2007
30

2008

25

42.1
35.5

20

28.5

2010
2011
2012

15

22.1
10
5

2009

13.5

5.6

7.3

9.2

17.0

10.6

2013
2014
2015

0
1

Previous year figures have been changed to reflect split of share into FV
of Rupees 2 per share

Proposed dividend

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BALANCE SHEET SIZE (Rupees in crore)

700,000

590,503

600,000

491,600
500,000
400,000

400,332
2013
2014

300,000

2015

200,000
100,000
0
1

DEPOSITS (Rupees in Crore)

500,000
450,000
400,000
350,000
300,000
250,000
200,000
150,000
100,000
50,000
0

450,796
367,337
296,247
2013
2014
2015

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RETAIL ASSETS (Rupees in crore)

250,000

193,035
200,000

164,763
136,388

150,000

2013
2014

100,000

2015

50,000

0
1

ADVANCES (Rupees in Crore)

400,000

365,495

350,000
300,000

2013

250,000
150,000
100,000

2014

2015

303,000

200,000

2015

239,721

2014

50,000
2013

0
1

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SAVING DEPOSITS (Rupees in crore)

124,927

140,000
120,000
100,000

88,211

103,133

80,000

Datenr

60,000
40,000
20,000
0
2013
2014
2015

NET INTEREST MARGIN (%)

4.50%
4.48%
4.46%

4.5%

4.44%

2013

4.4%

4.42%
4.40%
4.38%

2014
2015

4.4%
2015

4.36%
4.34%

2014
2013

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RETURN ON CAPITAL (%)

25
20

10

2013

20.4%

15

2015

20.1%

20.9%

2014

2014
2015

5
2013

0
1

CAPITAL ADEQUACY (%)

16.8%

16.8%
16.80%
2013

16.1%

16.60%

2014

16.40%
2015

16.20%

2015

2014

16.00%
15.80%

2013

15.60%
1

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DEBIT CARDS (Nos. in lac)

250
201 3

200

2014

216.3
150

2015

174.2
100
50

2015

157.6

2014
201 3

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CREDIT CARDS (Nos. in lac)

70

64.2

51.4

59.7

60
50
2013

40

2014

30

2015

20
2015

10
0

2014
2013

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RUPEE EARNED

Sales

11.5%

interest from advances

3.2%

interest from investment

19.6%
commission, Exchange
Brokerage

64.7%

FX & Derivative income

others

RUPEE SPENT

Sales

7.2%

4.5%

9.6%
48.7%
26.1%

interest expense
opearting expense
tax
transfer to reserve
dividend & tax on dvidend

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SUMMARY FINANCIAL PERFORMANCE

For the year ended
March 31,2015

March 31,2014

496,009

406,776.5

Advances

365,495.0

303003.3

Total income

57,466.3

49,055.2

Profit before depreciation and Tax

15,985.0

13,443.7

Net profit

10,215.9

8,478.4

Profit brought forward

14,654.2

11,132.2

Total profit available for Appropriation

24,870.1

19,610.6

Transfer to statutory Reserve

2554.0

2119.6

Transfer to General Reserve

1021.6

847.8

Transfer to capital Reserve

224.9

58.3

Transfer to Investment Reserve

27.5

3.2

Proposed Dividend

2005.2

1643.4

Tax including Surcharge and Education

408.2

279.3

0.8

4.8

18,627.9

14,654.2

Deposits and other Borrowings

Appropriations:

cess on Dividend
Dividend (including tax/cess thereon)
pertaining to previous year paid during the
year
Balance carried over to Balance sheet

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CONCLUSION OF THE STUDY

The above areas are related with the protection of customer interest.
There are various issues where bank as a service provider must come
forward and provide suitable guidance and information to protect
investors and depositors interest.
If a bank offers a right kind of services to the potential and existing
customer that it definitely leads to higher customer satisfaction. Unless
Until banks work for customer development and customer care,
expansion of business is usually not possible.
One should always keep in mind that it takes month to acquire a
customer but minutes to lose it. Therefore the primary social
responsibility of banks in order to retain their existing business and
expand their future business.
Therefore the corporate social responsibility is towards customer.

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BIBLOGRAPHY
WWW.GOOGLE.COM
MODERN BANKING IN INDIA (RELATED TO CSR IN
BANKING BOOK)

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CSR IN BANKING