a study on corporate social responsibility in indian...

“A STUDY ON CORPORATE SOCIAL RESPONSIBILITY IN INDIAN

BANKING SECTOR”

Vaishnavi Marwaha

[Assistant Professor, Institute of Management Studies, BJS Rampuria Jain College, Bikaner

and Research Scholar, Rajasthan Technical University, Kota (Raj.)]

Dr. Pankaj Jain (Principal, BJS Rampuria Jain College, Bikaner)

Abstract

This paper is a study of corporate social responsibility in the Indian banking sector.

Corporate social responsibility is an integral self-regulating business model. Corporate

social responsibility is an important instrument that provides a competitive advantage and

improves the reputation of Indian banks. Corporate Social responsibility (CSR) contributing

in welfare activities towards the development and growth of society, the public and private

sector banks concentrate on various activities like healthcare, eradicating hunger and

poverty, education, women empowerment, environmental sustainability, training and

development, disaster and relief management, etc. to spend the CSR amount. The paper is

based on Primary Data as well as secondary data are taken from the annual reports of the

banks for the year 2016 to 2019. Now-a day's CSR has been assuming greater importance in

the banking sector. The paper consists of key areas of three Public and three private banks.

Keyword: Corporate social responsibility, Indian banks, sustainable Development.

Introduction

The word "corporate social responsibility" emphasizes that the business has some moral

obligations towards society. Social working is a statutory requirement for the benefit of

society. Corporate social responsibility referred to as "to give back "to society or community

in which we have gain profit. It is a strategic approach in which the company has a wider

impact on society. It is also referred to as Business Responsibility‘ Corporate Citizenship‘ or

Business Citizenship‘ Community Relations‘ Social Responsibility‘ Corporate Sustainability‘

Corporate Accountability‘ Triple bottom line (TBL) Sustainable Responsible Business.

According to Bert Scholtens, "finance relates to the sustainability of economic development

and CSR. The three financing modes open the potential to direct the economic activities in a

way that takes account of social, ethical, and environmental issues". According to Michael

Hopkins (2003), CSR is concerned with treating the internal and external stakeholders of the

firm ethically or in a socially responsible manner and the wider aim of corporate social

responsibility is to create higher and higher standards of living, while preserving the

profitability of the corporation, for its stakeholders.

CSR is a set of management practices that ensure the banks minimize the negative impacts of

their operations on society while maximizing its positive impact. This definition, therefore,

provides the link between the decisions tied to social responsibility and ―the business"

derived from the respect of the population, the communities, and the environment.

International Journal of Research

Volume VIII, Issue IX, September/2019

ISSN NO:2236-6124

Page No:8

So CSR is now an integral part of the functioning of an organization. The performance of an

organization should not be judged on the financial parameters. The authorities need not only

focus on the financial performance but also to examine into the CSR performance of the

banks. Keeping in view the importance of banking sector in India, this study is focused on the

corporate social responsibility activities carried out by Indian public sector and private sector

banks also CSR is not about charity or donation but many different kinds of responsibility,

including economic and legal responsibility.

Objective

1. To understand the concept of CSR in the banking sector.

2. To study the major areas of CSR initiatives in the Indian banking sector.

3. To focus on the present status of CSR in Public and private sector banks.

Research Methodology

The research design in this study is Descriptive research design, Random Sampling technique

is used for selecting the Banks for this Study. There are a lot of public and private banks, but

the current study is limited to 3 public and 3 private sector banks. In which we include State

Bank of India, Punjab National Bank and Canara Bank and in private sector HDFC Bank,

ICICI Bank and YES Bank which covers the data from the period of 2016 to 2019. The Data

is collected from secondary sources particularly from concerned Banks Annual Report, Web

sites, newsletters and data from various journals.

Literature Review

This section provides a theoretical literature review on CSR activities in the banking sector in

India. India is the first country in the world to make corporate social responsibility (CSR)

mandatory. Companies can invest their profits in areas such as poverty, education, clean

environment, gender equality, and hunger.

The CSR concept came into common use in the late 1960s and early 1970s; it encourages

organizations to consider the interests of society by taking responsibility for the impact of the

organization's activities on consumers, employees, shareholders, communities and the

environment in all aspects of its operations. Evolution of corporate social responsibility in

India before 1947 the concept manifested itself through a charity that was carried out by

businessmen and philanthropists with a strong religious sentiment. The Gandhian philosophy

of trusteeship was popular in Post 1947; it advocated the role of PSUs as important elements

fulfilling the development agenda. At the time of liberalization at Post 1991, the era allowed

the entry of global players which enhanced competition in the market. The global standards

of CSR motivated the local players to respond to the need and enhance brand value and meet

customer satisfaction. When globalization economic start in post-2000 the global information

sharing allowed the Indian government to incorporate the best practices that made India the

first country to mandate CSR. The undertone has been focused on partnership and the triple

bottom line of engagement and not just on a monetary alliance.



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Corporate social responsibility is the most important part of the corporate world including

financial institutions and banking sector. RBI (2007) has also directed Indian banks to

undertake CSR initiatives for sustainable development and also asked banks to begin non-

financial reporting which is related to activities in the era of environmental, social and

economic accounting. It has been observed most of the Indian public sector Banks do not

mention CSR activities on their annual reports or the websites. The banking institutions do

not take adequate steps for updating the activities in CSR. RBI circulated a notice on

December 20 2007; in this notice RBI instructs the banks to integrate their business operation

along with social and environmental aspects.

Suman Kalyan Chaudhury, Sanjay Kanti Das, Prasanta Kumar Sahoo (2011), said in their

study that, there is an increasing awareness about Corporate Social Responsibility (CSR),

Sustainable Development (SD) and Non- Financial Reporting (NFR). The contribution of the

banking sector for sustainable development is paramount, considering the crucial role they

play in financing the economic and developmental activities of the world.

Kvasničková Stanislavská, L., Margarisová, K., Šťastná, K(2012), defined concept of

Corporate Social Responsibility on a theoretical level, They focuses on its development, its

present form and the influence on the financial performance of the company. They explore

the evolution of corporate donations and find the connection between corporate donations and

corporate profit and financial and economic crisis.

Applicability

India is the first country in the world to make corporate social responsibility (CSR)

mandatory. Ministry of Corporate Affairs has notified Section 135 and Schedule VII of the

Companies Act 2013 has introduced a new provision is corporate social responsibility, which

has come into effect from 1 April 2014. According to Section 135 of the Companies Act

provides the threshold limit for applicability of the CSR to a Company i.e.

Further, as per the CSR Rules, the provisions of CSR are not only applicable to Indian

companies but also applicable to branch and project offices of a foreign company in India.

Companies needed to disclose the amount of CSR spending to stakeholders. It is also

mandatory that company boards should have at least one female member.

Data collection

A major contribution of different banks towards society

Corporate social responsibility is a long-standing commitment to stakeholders. Banks are like

veins in the body system, while veins supply and control blood across body organs, Banks

controls the supply and control of money into the economy".

NET WORTH Rs 500 crore

TURNOVER Rs. 1000 crore

NET PROFIT Rs. 5 crore



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After the energy and power sector, banking is the second largest sector had to spend the

maximum amount of CSR (Corporate social responsibility).

A. State Bank of India

The origin of State Bank of India (SBI) in the 19th century with the establishment of the

Bank of Calcutta on 2 June 1806. State bank is the oldest bank in the public sector has

adopted green banking initiatives in its operations. The SBI Foundation aim is to

improving the socio-economic for well being of the society, to be the leading institution

for promoting growth and equality, responsive to the relevant needs of communities

where it operates. It also provides societal benefits to all communities of our country

without any regional, linguistic, caste, creed, religious or other barriers. And their mission

is to make resources available to the most vulnerable sections of the society for economic

development. The three pillars of "Vision" statement is –"My SBI", "My Customer First",

"My SBI first in Customer Service"

Table no. 1: The comparative chart of CSR spends in the last 3 Year in crore

(Source-SBI annual report)

CSR Activities 2016-2017 2017-2018 2018-2019

Health Care 56.00 10.16 5.017

Education 19.50 9.03 -

Disabilities 5.41 1.12 -

Skill Development 44.66 56.48 -

Environment Protection 4.78 2.25 1.67

Sanitation 4.04 4.51 1.24

Sports, culture, R&D and

others

7.37 25.98 -

Natural calamities 2.16 3.38 5

Total 143.92 crore 112.96 crore 16.46 crore



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So based on data collection state bank of India spend maximum amount on skill development

and training and development of employees and SBI continuously reducing the fund and also

reducing the different areas of CSR. In 2016-17 CSR expenditure was 143.92 and on 2018-

19 expenditure was 16.46 crore.

B. Punjab National Bank

PNB is a public sector bank headquarters in New Delhi, India. The bank was established on

19 May 1894. Corporate Social Responsibility is embedded in values and depicts how they

conduct business, develop and deliver services for attainment of goals and commitments of

organization. PNB follow the "giving back to society". Their CSR schemes PNB Ladli, PNB

Kisan Balak Shiksha Protsahan Yojana, Mahila Kaushal Vikas Yojana.

Table no. 2: The comparative chart of CSR spends in the last 3 Year in Lakh

(Source-PNB annual report)

CSR Activities 2016-2017 2017-2018 2018-2019

CSR at HO & ZOs 272.30 161.82 459.98

Farmers’ Training Centres

(FTCs)/ Financial Literacy

Centres (FLCs)

882.00 799.00 520.01

PNB Hockey Academy 136.90 120.00 96.85

PNB Ladli 35.57 40.00 24.01

Rural Self Employment

Training Institutes

(RSETIs)

1714.00 1741.00 1851.41

PNB Kisan Balak Shiksha

Protsahan Yojana

- - 1.89

Total 3040.77Lakh 2861.82 Lakh 2954.15 Lakh

0

10

20

30

40

50

60

2016-2017

2017-2018

2018-2019



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Based on annual report and bar chart we can say that Punjab national bank is doing good

work on corporate social responsibility and maximum amount of expenditure done in rural

selfemployment training institute which help to establish in a new entrepreneur and the

development of rural and economic growth.

C. Canara Bank

Canara bank was founded in 1906; headquartered in Bangalore. Vision and mission of Canara

bank is not just compliance, but it is a strategic business initiative to achieve sustainable triple

bottom line growth and empowering masses in society. CSR will build corporate reputation

and trust between bank and stakeholders. Major initiatives by the Bank under CSR have been

the setting up of Trusts and Institutions which have created an impact in serving the people

and society at large.

1. Canara Centenary Rural Development Trust

2. Canara Financial Advisory Trust

0

200

400

600

800

1000

1200

1400

1600

1800

2000

CSR at HO &ZOs

Farmers’ Training Centres (FTCs)/

Financial Literacy Centres (FLCs)

PNB HockeyAcademy

PNB Ladli Rural SelfEmployment

TrainingInstitutes(RSETIs)

PNB KisanBalak

ShikshaProtsahan

Yojana

2016-2017

2017-2018

2018-2019



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Table no. 3: the comparative chart of CSR spends in the last 3 Year in Lakh

(Source-Canara Bank annual report)

CSR Activities 2016-2017 2017-2018 2018-2019

Education 556.74 491.35 398.87

Health 274.39 158.99 91.11

Poverty and Nutrition 15.50 25.88 29.14

PWD and old age 124.60 65.29 27.56

Skill development 1688.00 1712.39 1379.45

Environment Protection 14.96 23.80 5.24

Rural Development 267.81 22.80 52.23

Women Empowerment 61.00 44.07 37.44

Financial Literacy 265.00 303.33 327.14

Swatch Bharat - - 13.60

Sports and other - 5.07 -

Total 3268.00 2852.97 2361.78

So based on data collection Canara bank of India spend maximum amount on skill

development and training and development of employees and people. Canara bank

continuously decreases the fund of CSR. In 2016-17 CSR expenditure was 3268 and on

2018-19 expenditure was 2361.

D. HDFC Bank

HDFC Bank is the largest private Indian banking and financial services company

headquartered in Mumbai, Maharashtra, established in August 1994. They are committed to

forging mutually-enriching partnerships for sustainable development. To achieve this, bank

work with marginalized society to try and understand the needs of society, and then formulate

strategies to bring "Parivartan" they need. The vision of HDFC bank is "Creating Sustainable

Communities"

0200400600800

10001200140016001800

2016-2017

2017-2018

2018-2019



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(Source- HDFC Bank annual report)

CSR Activities 2016-2017 2017-2018 2018-2019

Promoting Education 25.48 41.29 48.52

Skill Training and

Livelihood Enhancement

30.41 17.31 24.45

Health Care 23.56 15.19 17.34

Environmental

Sustainability

1.01 0.73 0.72

Eradicating Poverty 4.46 4.18 13.17

Rural Development 220.50 295.85 339.58

Total 305.42 Crore 374 Crore 443.78 Crore

In the budget of 2017 CSR activity includes 14.59 crore of unspent CSR expenditure, carried

forward from financial year 2016-17.78.

Based on the annual report we can say that HDFC bank is the second-largest private sector

bank that spends maximum on CSR. Through various initiatives such as drought mitigation,

renewable energy, and construction of water harvesting, construction of irrigation plants, its

aim to facilitate their infrastructural and economic wellbeing.

E. YES Bank

YES Bank, India's fourth-largest private sector bank, headquartered in Mumbai. It provides

high quality, customer-centric banking service. The policy of Corporate Social Responsibility

(CSR) guides the YES Bank to deliver internal and external positive socio-environmental

impact on stakeholders.

0

50

100

150

200

250

300

350

400

2016-2017

2017-2018

2018-2019



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YES Bank introduces the new concept of "Change maker" it is a great initiative for an

entrepreneur it helps in establishing a new small organization which helps to change in

society. YES Bank holds 2 Limca Book Records for Largest Social Filmmaking Challenge.


(Source- YES Bank annual report)

CSR Activities 2016-2017 2017-2018 2018-2019

YES COMMUNITY 6.46 7.31 12.40

Livelihood and Water

Security

11.08 11.27 1.90

Say YES to Sustainable

MSMEs in India

2.55 4.7 4.83

YES STEADY (Skills

Training and Enhancement

for Development of Youth)

5.21 4.12 3.16

Natural Capital incentives 0.12 3.92 6.99

Support to YES Foundation 14.34 11.72 22

Expenditure on

administrative overheads

1.9 2.14 2.50

Total 41.66 45.21 53.78

Based on data collection YES bank maximum amount spend on "support to YES Foundation"

it provides 7.5 crore grant support for 25 NGO s and social enterprises. YES bank

continuously increasing the CSR fund on 2016-17 it was 41.66 crore and now 2018-19 it is

53.78 crore.

F. ICICI Bank

In the banking sector, ICICI has spent the maximum amount on the welfare of society. ICICI

Bank established the ICICI Foundation for Inclusive Growth in 2008.

0

5

10

15

20

25

2016-2017

2017-2018

2018-2019



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ICICI Foundation has developed significant projects to built capabilities and Inclusive

Growth to support education, primary health, sustainable livelihood, and skill development to

achieve the CSR objectives.

Table no. 6: The comparative chart of CSR spends in the last 3 Year

(Source- ICICI Bank annual report)

CSR Activities 2016-2017 2017-2018 2018-2019

Projects of ICICI

Foundation for Inclusive

Growth

475.0 560.0 71.37

Rural development 1303.2 1040.6 -

Financial Counselling 9.3 30.0 -

Miscellaneous 36.1 23.2 2.50

Armed forces - 50.0 -

Total 1.82 billion 1,703.8 million 73.87 million

IN 2008 ICICI bank set up a foundation ICICI Bank's Social Initiatives Group (SIG) works

on high impact projects that are sustainable and scalable with pre-defined exits. ICICI

Foundation works with government authorities and specialized grassroots organizations to

support development work in four identified focus areas.

Data Analysis & Interpretation

After collecting the data, we moved to analyzed and interpret ate the data through the line and

bar charts.

0

200

400

600

800

1000

1200

1400

Projects ofICICI

Foundation forInclusiveGrowth

Ruraldevelopment

FinancialCounselling

Miscellaneous Armed forces

2016-2017

2017-2018

2018-2019



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Public sector Bank

Based on data collected of last three year of the top leading bank in the Indian public sector

of state bank of India, Punjab national bank and Canara bank. We analyze which banks spend

Maximum expenditure on CSR. According to data SBI spend maximum amount for social

welfare and economic development.

Public Sector Banks Total amount of last 3 Year

State Bank of Bank 274,00,00,000

Punjab National Bank 88,56,000

Canara Bank 84,82,000

Total 2757338000

Private Sector Bank

Based on data collected of last three year of the top leading bank in the Indian Private sector

of HDFC Bank, ICICI Bank, and YES bank. We analyze which banks spend Maximum

expenditure on CSR.

Private Sector Banks Total amount of last 3 Year

HDFC Bank 11,23,00,000

YES Bank 141,00,00,000

ICICI Bank 1959000000000

Total 1960522300000

Conclusion

This study shows detailed analyses of leading banks and it shows the different efforts by

different banks as well. CSR is a very important tool in the sustainable development of India.

The study shows that though the public and private sector banks are making efforts in the

CSR areas still there is a requirement of more emphasis on CSR. There are some banks which

are not even meeting the mandatory requirement and some banks are not showing the CSR

data on their annual reports. The banks have focused on the community welfare and farmers'

welfare programs but the efforts for women welfare and education are not sizeable.

Moreover, the public sector banks have the overall highest contribution in CSR activities.



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Banks are usually judged by their financial performance but this study gives a new dimension

for analyzing the performance of banks. Some top banks like YES bank HDFC bank and state

bank of India are best performers in terms of profitability and growth but they are not at the

top in CSR activities.

Conclusively, there is some advice for a better CSR in the banking sector. RBI should set the

CSR expenditure amount and timely review and take immediate action from the bank

because some banks are not taken it seriously and it is harmful to the society. This study is

valuable for policymakers to judge the banking performance from the viewpoint of social

welfare.

Bibliography

1. Eliza Sharma. And Dr. Mukta Mani (2013), "CORPORATE SOCIAL

RESPONSIBILITY: AN ANALYSIS OF INDIAN COMMERCIAL BANKS",

Administrative Science Quarterly, Vol.7, Issue ¼.

2. Deepika Dhingra and Rama Mittal, (2014) "CSR Practices in Indian Banking Sector"

Volume 6, Number 9, pp. 853-862.

3. Sabeena & Dr. N. A. Krishnamoorthi (2016), "CSR PRACTICES AND CSR

REPORTING IN INDIAN BANKING SECTOR" Volume I, Issue I.

4. Sharma, Nishi. (2010). CSR practices and CSR reporting in the Indian Banking

Sector. International Journal of Advanced Economics and Business Management,

1(2), 58-66.

5. S. K. Chaudhury, S. K. Das, and P. K. Sahoo, "Practices of corporate social

responsibility (CSR) in the banking sector in India: an assessment," research journal

of economics, business, volume 4, pp.76, 2011.

6. Prof. Sandeep Kaur (2016) "A STUDY ON CORPORATE SOCIAL

RESPONSIBILITY (CSR) IN INDIAN BANKING SECTOR" Vol. 8, Issue, 11,

pp.42604-42606, November 2016.



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