Journal of Xi'an University of Architecture & ISSN No : 1006-7930

Technology

CORPORATE SOCIAL RESPONSIBILITY IN INDIAN BANKING SECTOR

Dr.J.Francis Mary,
Director,
Dept. of Management Studies,
Shrimathi Indira Gandhi College,
Affiliated to Bharathidasan University
Trichy, India.

ABSTRACT:

Corporate Social Responsibility is a tool used by many corporate sectors to meet the people’s
demand, in order to more responsible to the environment they operate in. This paper
contributes in examining the role of banking sector in CSR including disaster period. India
being a developing country needs support from the entire sector in its upliftment. Banking
sector plays an important role in developing the economy not only by lending money, but also
by practicing CSR activities. Through CSR activities, Commercial banks provide various
benefits for the upliftment of the poor.

Keyword: Corporate Social Responsibility, Commercial Bank, Disaster Management, HDFC,

ICICI.

INTRODUCTION:

CSR focus on the principles of sustainable development by the companies. This inturn makes
the company economically viable, have a positive impact on society and respect and preserve

the environment.

According to Friedman (2006) "There is one and only one social responsibility of business to
use its resources and engage in activities designed to increase its profits so long as it stays
within the rules of the game, which is to say, engages in open and free competition without
deception or fraud"

Increase in commercialisation and industrialisation in different sectors had resulted in

increase in global warming, green house gas mission and raising the level of waste which in
turn have harmful effect for the future generation. In order to protect the environment, a new
concept called Corporate Social Responsibility (CSR) emerges in new companies’ act that
was amended in December 2012.
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CSR is an Instrument for business to have radical change in attitude even in banking sector.
CSR is also known as Sustainable Responsible Business (SRB) or Corporate Social
Performance. It is a form of corporate self regulation which is integrated into business model.

REVIEW OF LITERATURE:

Dr.J.Francis Mary & Ms.K.Radha (2019) in the article analyse a large number of investors
are unaware of the happenings inside the company premises. It is also one of the rights of
each stakeholder to know what is happening within the premise. This article shows how the
corporate governance acts as a CSR for the society.

Erum Shaikh (2019) in his study, he analyse how the CSR activities influence on the
performance of the banking sector in Pakistan. The result revealed that there is a positive
relationship between CSR and Employees commitment towards the organisation. This
significantly shows in future, increase in CSR actions will increase the commitment level of
the employees, since the employees will feel proud to be the part of the organisation.

Nidhi (2016) in her paper, she studies about the corporate social responsibility in India. The
article had highlighted the major area of contribution like education, rural development,
Children and women, social community welfare by the banking sector in CSR activities. He
conclude that the banking industry in India is giving due importance to the Social
Responsibility and they try to cater all the important areas to be focused like health,
education, sanitation, etc.

Manisha Saxena & A S Kohli (2012) study the impact of Corporate social responsibility in
banking industry with respect to organisational financial performance. A relationship had
been analysed between CSR rating and Profit after Tax and also with Earning per Share. But
result indicates that there is insignificant impact of CSR on Profit After Tax and Earning Per
Share.

Shirley Yeung (2011) in his paper analyse the perception towards Corporate Social
Responsibility with respect to banking sector in Hongkong. In this article they analyse about
the Quality. He states that providing quality products and services not only sufficient, but also
developing responsible and ethical staffs are much more important.
 OBJECTIVES OF THE STUDY:

1. To analyse the status of CSR practices in Indian

banking sector. 2. To acquire perception about various
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Technology

3. To understand the CSR practices including disaster management activities during

disaster performed by the banks.

LIMITATIONS OF THE STUDY:

1. The study is restricted only on CSR activities including disaster time.

2. Only HDFC Bank and ICICI bank arc considered for analysis.

Evolution of CSR:

Corporate Social Responsibility is a self regulating business model that motivates each and
every organisation to be socially responsible.CSR is not a new term, it had been originated
long back in Mauryan history, where philosophers like kautilya focused on ethical practices
and principle while conducting a business .The CSR evolution has it 4 phase of development.

Phase I (Philanthropy): The first phase of CSR is driven by philanthropy and Charity.
Philanthropy is derived from a greek word “philanthropos” which mean “love of
humankind”. In Philanthropy, CSR are influenced by family values, traditions, culture and
religion. Till 1850, the wealthy men shared their riches to the poor by building temples,
religious institutions and providing granaries for the poor and hungry.

After Industrialisation, the Industrialists like Tata, Birla, Godrejs, Bajaj promoted the CSR
concept by setting up charitable foundations, educational and healthcare institutions.

Phase II (Globalised Risk): The second phase of CSR started during independence struggle.
Industrialisation emerges during this period; Mahatma Gandhi gave the concept of
trusteeship. As per trusteeship, he urges the industrialist to share their wealth for the benefit of
 the poor. This concept helped in the socio economic growth of the country like rural
development, women empowerment and education.
Journal of Xi'an University of Architecture &

Technology FIG 1: EVOLUTION OF CSR

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Phase III (Citizenship): In the third phase, CSR was influenced by public sector
undertakings. Private sector undertakings are framed by the policy of industrial licensing,
high taxes, which resulted in corporate malpractices. This led to enactment of legislation
regarding corporate governance, labor and environmental issues. This made the active
involvement of private sector in the socio –economic growth. In 1965, the academicians,
politicians and businessmen set up a national workshop on CSR, where great stress was laid
on social accountability and transparency. This led to increased impetus in Industrial growth,
which in turn making companies to contribute more for social responsibility.

Phase IV (Sustainability): In the fourth Phase, with the emergence of globalisation and
economic liberalisation, there was a huge growth in economy in India. Therefore Indian
companies integrated CSR into Sustainable strategy.

In the current scenario in India, the new companies act amended in December 2012 mandates
the corporate to spend 2% of their average net profits of the last three financial years towards
CSR. This is applicable for companies with a turnover of 1000 Cr/ PAT of 5 Cr/ or net worth
of 500 cr. The new bill replaces the Companies act 1956 and emphasizes carrying forward the
 agenda of Corporate Social Responsibility.

SOCIAL OBLIGATIONS AND CSR:

A good CSR practice will increase the morale of the workers, which inturn increase the
productivity .Indirectly religion, culture, tradition, family values plays a major role in
contributing toward CSR activities
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∙ Zakaat is an Islam law which states that “a portion of one’s earning must be shared with
the poor in the form of donation.

∙ Similiar to Islam’s Zakaat, Sikhs followed Daashant . This is sikh’s religious obligation.
One tenth of their earnings are contributed towards common resources of community
in the name of Guru.
∙ Hindus followed Dharmada where the manufacturer or seller charged a specific amount
from the purchaser, which was used for charity. The amount was known as charity
amount or Dharmada.
∙ In Atharvana veda it says “one should procure wealth with one hundred hand and
distribute with one thousand hands”.
∙ Yajurveda says “enjoy riches with detachment; do not cling to them, because they
belong to public.”
∙ In Rig Veda it states, “Need for the wealthy to plant trees and build tanks for the
community as it would bring glory to life in future”.

Our Earth is known as a Mother. This inculcates the feeling of to be responsible towards our
Mother Earth. Social obligations, Patriotism and responsibility made the banking sector to be
more focused on CSR activities.

INDIAN BANKING SECTOR:

∙ Indian banking sector is well organised and regulated.

∙ The Indian banking system consists of 18 public sector banks, 22 private sector banks,
46 foreign banks, 53 regional rural banks, 1,542 urban cooperative banks and 94,384
rural cooperative banks as of September 2019.
 ∙ As per the Reserve Bank of India (RBI), India’s banking sector is sufficiently capitalised
and well-regulated. RBI’s new measures may go a long way in helping the
restructuring of the domestic banking industry.
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∙ The digital payments system in India has evolved the most among 25 countries with
India’s Immediate Payment Service (IMPS) being the only system at level 5 in the
Faster Payments Innovation Index (FPII).

∙ Reserve Bank of India (RBI) has decided to set up Public Credit Registry (PCR) an
extensive database of credit information which is accessible to all stakeholders.

A Commercial bank is a financial institution where people do their banking activities like
deposits, checking account services, loans and savings, as opposed to investment bank
with a motive of profit making in 21st century. In spite of all these activities, Commercial
banks also concentrate on CSR activities.

TABLE 1: LIST OF SCHEDULED COMMERCIAL BANKS

Sl.No Public sector bank Private sector bank

1 State Bank of India Axis Bank Ltd

2 Allahabad Bank Catholic Syrian Bank

3 Andhra Bank City Union Bank Ltd

4 Bank of Baroda Development Credit Bank Ltd.

5 Bank of India Dhanlaxmi Bank Ltd

6 Bank of Maharashtra Federal Bank Ltd.

7 Canara Bank HDFC Bank Ltd

8 Central Bank of India ICICI Bank Ltd.

9 Corporation Bank IndusInd Bank Ltd.

10 Dena Bank Jammu & Kashmir Bank Ltd.

 11 Indian Bank Karnataka Bank Ltd.

12 Indian Overseas Bank Karur Vysya Bank Ltd.

13 Oriental Bank of Commerce Kotak Mahindra Bank Ltd

14 Punjab National Bank Lakshmi Vilas Bank Ltd.

15 Punjab & Sind Bank Nainital Bank Ltd

16 Syndicate Bank Ratnakar Bank Ltd.

17 Union Bank of India Union Bank of India

18 United Bank of India Tamilnad Mercantile Bank Ltd

19 UCO Bank Yes Bank Ltd.

20 Vijaya Bank Bandhan Bank

21 IDBI Bank Ltd IDFC Bank Ltd.

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Technology CSR INITIATIVES BY THE BANKING

Banking sector not only concentration in financial term, but also in upliftment of society. The
government provide data regarding the amount spent on CSR activities.

TABLE 2: LIST OFCSR SPENT TOP TEN COMPANIES

RANK FY 2017-2018 FY 2016-17 FY 2015-16 FY 2014-2015

1 Reliance Reliance Reliance Industries Limited Reliance

Industries Industries Industries
Limited Limited Limited

2 ONGC ONGC NTPC Limited Oil And

Natural Gas
Corporation
Limited

3 Tata TCS ONGC Infosys Limited

Consultancy
Services Limited
 4 Hdfc Bank Hdfc Bank Limited TCS Bharat Heavy
Limited Electricals Limited

5 Indian Oil Infosys Limited ITC Limited Tata

Corpn. Limited Consultancy
Services
Limited

6 Infosys Limited NTPC Limited Central Coalfields Limited Itc Limited

7 Mahanadi ITC Limited NMDC Limited Ntpc Limited

Coalfields
Limited

8 NTPC Limited Oil India Limited Tata Steel Limited Nmdc Limited

9 Wipro Limited Indian Oil Corpn. Infosys Limited Tata Steel Limited
Limited

10 Housing Wipro Limited Power Finance ICICIBank

Development Corporation Limited Limited
Finance Corp.

SOURCE: https://www.csr.gov.in/

Major areas of CSR along with their expenditure on CSR activities:

1) HDFC Bank :

HDFC Bank is a big player of private sector bank which is well established in working.
HDFC Life is committed to being a socially responsible corporate and its CSR framework is
governed by a formal policy. Besides, the Company’s employees also actively embrace and
participate in the Company’s community initiatives to accelerate inclusive growth and
strengthen environment protection. Areas of CSR intervention includes Empowering through
Sustainable Livelihood Initiatives, Financial Literacy and Inclusion, Promoting Education,
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Skill Training and Livelihood Enhancement, Promoting Healthcare, Environmental

Sustainability, Eradicating Poverty and Rural Development.

TABLE 3: HDFC CSR ACTIVITIES ( in Crores )

CSR Development FY 2014-15 FY 2015-16 FY 2016-17 FY 2017-18
Project(s) Sector(s)
 1 Environmental 9.50 7.20 1.01 0.73
sustainability

2 Vocational skills 124.70 179.90

3 Education 161.53 34.59 25.11 41.29

4 Health care 72.40 82.60 23.19 15.19

5 Rural 801.80 93.04 220.13 295.85

development
projects

6 Poverty hunger 13.6 4.46 4.18

malnutrition

7 Skill Training 30.04 17.31

and Livelihood
Enhancement

Average Net Profit 98.56 124.00 15,199.60 18,246.45

CSR SPENT 1.19 12.72 305.42 374.54

SOURCE: https://www.csr.gov.in/

2) ICICI Bank :

ICICI Bank is the second largest bank in India in terms of assets and market
capitalisation. The bank has a network of 5,275 branches and 15,589 ATMs across
India and has a presence in 17 countries including India. ICICI’s CSR activities
includes Education, Health care, Skill development and sustainable livelihoods,
Financial inclusion, Support employee engagement in CSR activities and Capacity
building for corporate social responsibility.

TABLE 4: ICICI CSR ACTIVITIES (in Crores )

CSR Development FY 2014-15 FY 2015-16 FY 2016-17 FY 2017-18
Project(s) Sector(s)

1 Education 7.39 6.9 0.93 3

2 Environmental 3.23
Sustainability

3 Livelihood 41.28 1 47.5 56

enhancement
projects

4 Vocational skills 1.70 45.00

 5 Health care 0.62 0.9 3.61

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Relief Fund
3.70
3.87
6 Prime Minister National

7 Rural 130.00 140 130.33 104.06

development
projects

8 Armed Forces 5
Veterans War
Widows/ Dependants

Average Net Profit 8,578.96 10600 9,986.39 8510.12

CSR SPENT 155.00 172 182.36 170.2

SOURCE: https://www.csr.gov.in/

Banking sector Contribution during Disaster Period:

Natural disaster affects everyone in the same manner irrespective of region and sector. The
social and economic cost that the society had occur is irrecoverable. But because of CSR
activities these disaster are overcome by the affected people. The corporate in India have
always played a major role in post-disaster relief, rehabilitation and reconstruction efforts in
the affected regions. Likewise the banking sector plays the critical and catalytic role in
streaming the disaster management area.

∙ All disaster relief expenditure to count towards CSR. Besides disaster relief activities,
the lists of activities that can be counted towards CSR include, hunger and poverty
alleviation activities, promotion of education and vocational training, and promotion
of gender equality.

∙ Our society is facing major challenges due to Global warming, pollution etc. In order to
retrieve the resources for future purpose many activities had been followed by the
corporate.
 ∙ The Confederation of Indian Industry (CII), was the first industry Organization to
constitute a Disaster Management committee in May 2001.

∙ The Gujarat Cyclone of 1998 with two landfalls and a wind velocity between 170-200
kmph, ripped through the industrial heart of Gujarat and inflicted an economic loss of
nearly Rupees 2,500 crores.
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∙ Gujarat being one of the most industrially advanced state in the country had suffered due
to Bhuj Earthquake in 2001. The earthquake caused nearly ten thousand industrial
units to go out of production as it struck the industrial heartland of the State. The total
economic loss was assessed at over Rupees five thousand crores.

∙ By adopting the villages and contributing to the reconstruction of social and community
asset during the disaster of Orissa’s Super cyclone 1999 and Bhuj Earthquake 2001 ,
the CII had undertaken extensive relief, rehabilitation and reconstruction work.

∙ The people affected by the 2004 Indian Ocean earthquake and tsunami were able to
rebuild their lives and communities. Many lost their basic needs to live. It is due to the
helping hand provided by many corporate sectors and banks rebuild their life.

∙ State bank of India, Indian Overseas Bank and ICICI Bank are permitted to accept
donations to the Chief Minister Public Relief Fund ( CMPRF ) and to credit the
proceeds in Indian rupees to CMPRF account maintained by Indian Overseas bank.

∙ During 2004-05, HDFC Bank, in conjunction with a non-government organization

(NGO) launched a Payroll Giving Program through which employees can make
contributions from their monthly salaries to support causes of their choice. in response
to the tragic tsunami disaster which caused huge loss of life and property in the
coastal belt of South India, HDFC Bank’s employees made generous monetary
contributions to the Prime Minister’s Relief Fund with HDFC Bank making an
equivalent contribution to this cause.
 ∙ Chennai flood is one such disaster, which was unexpectable. The 2015 South India
floods resulted from heavy rainfall generated by the annual northeast monsoon in
November–December 2015. They affected the Coromandel Coast region of the South
Indian states of Tamil Nadu. Supplies of basic necessities, including milk, water and
vegetables, were affected due to logistical difficulties. Many lost their houses.
Funding had also been obtained from the World Bank and from the Asian
Development Bank for climate-change impact reduction initiatives.
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∙ In addition to natural disaster, the society is also facing industrial and chemical disaster
due to rapid industrialisation. The Bhopal Gas Tragedy of 1984, involving a sudden
release of about 30 tonnes of methyl isocynate (MIC) caused severe health and
respiratory problems and birth of deformed and still-born children.
worst Chemical disaster.

∙ Presently in 2020, we are facing a major disaster – COVID 19. WHO declared COVID-
19 as Pandemic disease. The virus had spread worldwide.

∙ Banks to offer emergency funds to aid pensioners, salaried, self-help groups, MSME,
large corporate of a salary loan of up to 20 times of his/her last drawn monthly gross
salary, up to Rs 2 lakh. Emergency pension loans can also be availed by senior
citizens, up to 15 times their monthly pension, capped at Rs 2 lakh.

∙ Kotak Mahindra Bank contribute 50 crore toward covid 19 in PM Care fund.

Day by day the society is facing many disasters, which is really challenging activity to
overcome it. Without corporate sectors, Banks, Financial institution and many helping hands
it is difficult to overcome the situation.

Government also started Prime Minister’s National Relief Fund (PMNRF). PMNRF was
established in 1948 by then the Prime Minister Pt. Jawaharlal Nehru. It was established with
only public contribution. The resources of the PMNRF are utilized to render immediate relief
to families of those killed in natural calamities like floods, cyclones and earthquakes, etc.

CONCLUSION:
 The analysis shows that the Indian banks are making efforts in the CSR practices. HDFC
Bank and ICICI bank are being in the top ten lists in CSR Portal. Both the banks had
contributed major part in rural development. HDFC bank also contributed towards education,
Vocational skills and Health care. In disaster period, banks also helped the society. Hence,
this analysis proves that CSR practices made by the banking sector is giving due responses to
the societal contribution for the upliftment of the poor and needy.
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