CSR and Ethical Issues of

Kotak Mahindra Bank Limited

Harivishnu R
18UHCMD053
East West College of Management
Introduction
Social responsibility is an important part of business ethics. A business is responsible
not only for treating its employees and customers well, but also for keeping up its end of
the bargain with society at large. A business social responsibilities frequently clash with
its ethical responsibilities. Corporations are legally responsible for looking after
shareholder profits. At the same time, they are socially responsible for minimizing
socially damaging business decisions. Ethical business leaders therefore face the
challenge of making a profit without forcing society to foot the bill.
A successful business should be invested in its community. Businesses that are
respected by their communities will do better in the long run, and most companies are
expected to put some money back into the community that helps make them a success.
Companies are also expected to act ethically and honestly with the community, their
employees and shareholders. Corporate fraud, shutting down local businesses, cheating
on taxes and violating federal and state laws can have serious repercussions for a
company, and not just in the sense of legal fees and prison time. Customers want their
companies to act like responsible and respectable members of the community and often
feel embarrassed or upset over a business’ ethics violations. A company should always
take the ethical high ground to preserve its standing with consumers.
Characteristic Features
• Kotak Mahindra Bank’s Code of Conduct, Ethical Conduct and Fair Practice Code are
some of the key internal drivers towards conducting business in an ethical and
transparent manner.
• Kotak has always striven to develop hassle-free banking facilities for its customers,
thereby enhancing customer experience.
• The Bank focuses on implementing a diverse range of employee engagement and
development programs.
• From identifying the developmental needs of its employees to paving the way for
future leaders, Kotak’s aim is to support the personal and professional growth and well-
being of its workforce.
• Kotak has set up multiple channels of communication with its stakeholders which
facilitates a meaningful dialogue, leading to enhanced value creation.
• It believes in keeping the interests of its significant stakeholders first which in turn
helps build long-term relationships based on mutual trust and respect.
Objectives
• Integrated Governance: KMBL’s policy framework adheres to the code of conduct,
ethical conduct and fair practice code.
• Digital Tools for Empowerment: KMBL strives to develop products and services that
maximize value for all customers, and is currently doing so through digital innovations.
• One Team, One Dream: KMBL’s endeavor is to bring all employees together by
integrating the core values and culture of the Bank.
• Stakeholder Inclusiveness: Through the stakeholder engagement process, KMBL
attempts to identify issues that are critical to the business as well as its key stakeholders
in addition to implementing systems to improve upon their customer service.
• Ensuring Fair and Equal Treatment: KMBL’s policy on Human Rights dictates that
there is no discrimination made amongst employees or the customers to which the
Bank’s products and services are offered. All aspects of human rights are considered
before undertaking any management decisions.
• Enhancing Consumer Experience: A 24x7 customer service support is available for
customers to raise their grievances which is then handled directly by a Relationship
Manager
Need and Scope
• Ethics, Transparency and Accountability: Kotak believes maintaining high standards
of ethical behavior and integrity, a significant aspect contributes to managing risks.
• Responsible Products and Services: Kotak is one of the leading private sector banks
in India and is well aware of its responsibility to improve the socio-economic status of
the country.
• Employee Well-being: The Bank considers its people to be its greatest asset. It is the
organization's responsibility to enable a healthy and enriching work environment.
• Employee Engagement: Kotak is committed to encourage its employees and create an
ecosystem where people are professionally nurtured.
• Diversity and Inclusion: When employees belonging to diverse skill-sets come
together, they bring with them experiences on how to deal with different situations,
especially challenging ones.
• Talent Development: Kotak proactively gives its employees access to the best possible
opportunities and resources with respect to developing new skills.
Advantages
• Kotak’s Fair Practices Code ensures that all its products and service offerings are made
available to its customers without discrimination.
• The Bank safeguards the rights of all its employees, customers, and business partners,
etc., upholding the dignity of every individual.
• Employees have the freedom to choose whether they wish to associate with Kotak or
not.
• The Bank does not employ child labor and the security personnel has been instructed to
prevent the entrance of child workers into its premises.
• Kotak periodically monitors the compliance of all its contractors with regard to the
terms and conditions outlined in the supplier contract.
• Kotak proactively gives its employees access to the best possible opportunities and
resources with respect to developing new skills.
• The launch of digital acquisition platforms led to a significant reduce in the use of
volume of paper.
Disadvantages
• Around 60 of the 220 NSE listed companies including Kotak Mahindra Bank,
publishing their FY19 annual reports so far have not fully spent their CSR budgets
mandated under law; 2 per cent of average net profits of past three years.
• Under the new law, companies violating CSR norms will attract fines ranging from
Rs 50,000 to Rs 25 lakh, with officers concerned liable for imprisonment up to three
years.
• Many companies are finding it difficult to spend the CSR funds. India’s most valuable
company has about Rs 108 crore unspent in FY19, and it cited multiyear project
funding to explain the shortfall.
• Kotak Mahindra Bank unspent 71 per cent of the required amount, citing the inability
of partner NGOs to spend the money.
• The whole concept of pushing CSR responsibility on to companies is wrong.
Corporates pay 10 types of taxes and it is the government that has to use these taxes to
spend for the masses.
Benefits
• Kotak upholds the highest standard of integrity and ethical behavior.
• The Bank’s Fair Practice Code ensures that services and products are provided to
customers regardless of their caste, creed, color, religion, gender etc.
• By making its products and services more accessible, the Bank has managed to
increase its customer base.
• Kotak has a dedicated construction equipment division that offers financial support for
the procurement of equipment required for construction of roads, irrigation, mining,
ports, housing, railways, metro.
• Kotak’s initiatives provide an opportunity to reach out to the largely un-banked and
under-served sectors of the society
• Through stakeholder engagement, the Bank identifies material aspects and develops
mechanism to improve its business processes and systems.
• Kotak Education Foundation empowers young people from underprivileged families
through various education based initiatives and equips them with employable skills.
Current Scenario
• Kotak partnered with the Haripada Ghosh Foundation to implement its CSR Education
Program. This program aims to provide access to quality education to underprivileged
communities by constructing residential schools in West Bengal where the language of
instruction is English.
• The Society of Parents of Children with Autistic Disorder (SOPAN) has been Kotak’s NGO
partner for over a decade through its employee Payroll Giving Program. The Bank
established a CSR program by setting up “SHANAY Autism Resource Centre (ARC)” in
New Panvel and Navi Mumbai.
• The Bank partnered with Sarva Vidyalaya Kevalani Mandal to provide access to students
with basic educational facilities by constructing an Engineering College in the Sarva
Vidhyalaya campus under the Kotak-Sarva Vidhyalaya Kelvani Mandal’s Education
Program in Gujarat.
• The Bank sought to collaborate with Bandhan-Konnagar to implement its CSR Program for
Education.
• Kotak partnered with IT For Change (ITfC) program to revamp and enhance the quality of
education in government schools in four Indian states viz; Telangana, Andhra Pradesh,
Rajasthan and Karnataka.
Conclusion
The Bank's philosophy of corporate governance goes beyond a set of policies and
practices to promote it as an integral element of Kotak's culture. The robust corporate
governance framework of the Bank guides the organization's efforts to conduct business
in an ethical, responsible and transparent manner. The Corporate Social Responsibility
(CSR) performance is reviewed by the Bank's Board at Board Meetings. Kotak Mahindra
Bank Ltd. (KMBL) and its subsidiaries reviewed its Policy Statement on CSR to
strengthen it in accordance with Section 135 and Schedule VII requirements of
Companies Act, 2013. Further, the Bank established a CSR Committee to strategically
guide it in effective implementation of its Policy Statement on Corporate Social
Responsibility.
KMBL is regarded as one of the most efficient and high-performing banks in India,
built on the principles of simplicity and prudence. Today, the Kotak Mahindra Group, a
first-generation enterprise with revenue of US$ 2.8 billion, has a global presence,
employs over 30,000 people and is recognised as one of the leading employers in India.
Kotak Mahindra Bank believes in positively contributing to the economic, environmental
and social well-being of communities through Corporate Social Responsibility (CSR)
agenda.
Bibliography
• https://www.kotak.com
• https://indiacsr.in
• https://economictimes.indiatimes.com
• https://www.kotak.com/content/dam/Kotak/about-us/csr-policy/Business-
Responsibility-Report-(BRR)-FY-15-16.pdf
• https://www.kotak.com/content/dam/Kotak/about-us/csr-policy/Business-
Responsibility-Report-(BRR)-FY-17-18.pdf
Thank You