Corporate Social Responsibility: A Check on Indian Banks for Responsible

Investment

Ruchi Gupta
Gaurav Agrawal
ABV - Indian Institute of Information Technology and Management
(ruchi.gupta.1086@gmail.com)
ISBN: 978-81-924713-8-9

Corporate social responsibility (CSR) is widely used concept these days, especially after companies’ bill 2013. But CSR
activities and its strategic values in policy formulation for an industry may differ from another industry. Even the
importance of integral components of CSR is different for every industry and this is the reason that one industry feel
more responsible for environmental issues while other industry feel like to invest in social issues. The purpose of this
paper is to study the significance of CSR in Indian banking industry and how it is unlike in comparison to other
industries even in same sector. Content analysis was done to achieve this objective. Annual reports of 2013 – 14 were
collected from official websites of banks and these banks were selected from published list of 500 listed companies of
Dun & Bradstreet. It seems that banks feels more responsible for social issues and financial inclusion is central part to
fulfil their social responsibility while environmental issues remain unaddressed by most of them.
Keywords: Corporate social responsibility, content analysis, annual report, banks, India

1. Introduction
The concept of corporate social responsibility has evolved over the decades but still there is no proper definition of it. Authors
defined it as an integration of social, ethical, economic, environmental and legal expectation of society from business
organizations. Now after globalization, liberalization and privatization CSR activities become important part of strategies
formulation to fulfil competitive urge. Government, non – profit organization, community welfare societies and business
organization are working together for development of economy through such activities. Banking and financial institution are
not different from other and being backbone of Indian economy they have to cope up with all changes around them.
Responsibility of banking industry is more in comparison to other because of their financing services which create multiplier
effect on the on whole economy and long term sustainability. In emerging economy like India banks should act responsible in
investment and financing any project with respect to social and environmental issues.
Banking sector plays very important role in Indian economy, it acts like blood in body for proper and smooth functioning.
Post independence Reserve bank of India (RBI) was established in 1935 which was nationalized in 1949 and with this
banking regulation act empowered RBI to regulate, control and inspect the banks in India. This act also made mandatory to
register all banks with RBI that means no bank in India can operate without taking permission from RBI. But as banks got
listed in stock exchange with globalization and liberalization they have to follow set norms of Securities exchange board of
India (SEBI) for trading purpose, Companies act 1956 under supervision of Ministry of corporate affairs (MCA) and Reserve
bank of India (RBI) at same time.
Reserve bank of India (RBI), Ministry of corporate affairs (MCA) and Security exchange board of India (SEBI) issue
guideline from time to time for all organization to follow all rules and regulation. There are especial guidelines for corporate
social responsibility in companies’ bill 2013 which are applicable from 2014 – 2015. RBI set up Khan Committee in 2005
and Nachiket committee in 2013 to covers all commercial bank under financial inclusion plan and make it compulsory to
submit a report on CSR activities at the end of every year.
The purpose of this paper is to study the importance of corporate social responsibility in strategy formulation of top 10
banks on Indian on the basis of income. Content analysis was done to study annual reports generated from official website of
these banks. Content analysis was used in number of studies to explore structured document.

2. Literature Review
In starting Bowen (1953) defines CSR as obligations of businessmen to pursue those policies to make those decisions or to
follow those lines of relations which are desirable in terms of the objectives and values of our society”. Friedman (1962,
1970) said “There is one and only one social responsibility of business-to use its resources and engage in activities designed
to increase its profits” and corporate social responsibility minimizes the corporation focus on profit. Hederson (2001)
mentioned that Corporation should concentrate on what they can do best, should create job opportunities and increase the
wealth of stakeholders. Interests of Private Corporation is quite separate from public corporations, so they cannot do any with
CSR. It is only government that should speak for society, not business people.
128 Twelfth AIMS International Conference on Management

But Deegan & Gordon (1996), Adams et al. (1998), Patten (1992), Deegan et al. (2000) and Campbell (2004) mentioned in
their studies that these activities increased over a period of time as it provide competitive edge over other in terms of
connectivity with customer, investor, government etc. Frederick (1960) mentioned ‘Social responsibility means that
businessmen should oversee the operation of an economic system that fulfils the expectations of the people. And this means
in turn that the economy’s means of production should be employed in such a way that production and distribution should
enhance total socio-economic welfare. According to Samuel O in 20th century CSR become important part of strategical
decision and companies took it practically to find out cost benefit analysis. That is why Wilson (2000) said that ‘corporate
responsibility must begin with the practical recognition that the corporation must be profitable enough to provide
shareholders a return that will encourage continuation of investment’. Companies started taking their stakeholder seriously
and there is platform given to them for discussion. Labour unions, environmental groups and other relevant stakeholders and
the implementation of certification solutions by corporations, which helped in the establishment of codes of, conduct
(Kapstein, 2001).
Literature witnessed that banking industry require special attention because working pattern and dimensions of banks are
different from companies (Jensen and Meckling, 1976) in terms of assets and funds. In companies major problem is agency
gap between majority shareholder and minority shareholders but in banks depositors are more important than shareholders as
majority of assets are funded by them. Two main features set banks apart from other businesses – level of opaqueness in their
functioning and the relatively greater role of government and regulatory agencies in their activities (Sharma et al., 2013).
Evolution of banking and financial industry and corporate social responsibility can be divided into five phase. Each and every
phase shows the development till date:

Table 1 Evolution of Banking Sector and Corporate Social Responsibility

Phases Evolution of Banking Industry Evolution of CSR
Pre – independence There was a concept of trusteeship given by Gandhiji for women empowerment, social
Phase 1
(upto 1947) upliftment and development through sharing and caring.
Pre – nationalization phase There was a trend of voluntary CSR activities based on cultural, ethics, family background
Phase 2
(1947 -1969). and moral values.
Compliance of various legal laws (Labour law, compensation act, environmental law,
Expansion phase
Phase 3 minimum wage act, etc) enforced business organization to fulfil basic responsibility towards
(1969 - 1984).
society and environment. Shareholders happiness became important part of CSR activities
Concept of CSR became wide and external stakeholder also become focal point other than
Consolidation phase
Phase 4 internal ones. Now companies understood that such activities can affect short term
(1985 – 2000).
financial performance and long term sustainability.
CSR became part of strategy formulation and execution. Government, non profit
Restructuring phase
Phase 5 organization and business organizations are working together. Amendment in
(2000 onwards).
companies’ bill and compulsory contribution by companies.

3. Research Methodology and Data Collection

It is an exploratory research was conducted, where content analysis was done to investigate important area of 10 top banks in
India. The banks were selected on the basis of total income given in the data given by published data of Dun & Bradstreet
titled ‘India’s Top 500 companies 2014’. Official website to generate annual reports and sustainability report were explored
to find out the desired data for the study.

Table 2 Top 10 Public Sector and Private Sector Banks

Type of Bank Number of Bank Percentage
Public sector 7 70
Private sector 3 30
Total 10 100

4. Findings of Study
Detailed investigation is done to all annual reports collected from official website of banks. Various parameters like
ownership, major area of CSR contribution, Publication of business responsibility report (BRR), Formation of CSR
committee, Publication of separate CSR report or sustainability and total CSR amount contribution were analysed to
understand the aptitude of bank.

Table 3 State Bank of India

CSR Amount CSR Report CSR BRR
Ownership Major CSR areas
(Cr.) Publication Committee Publication
Government owned 148.93 As a section annual 1. Education
No Yes
organisation report 2. Healthcare
Twelfth AIMS International Conference on Management 129

3. Environment
4. Assistance to poor
5. Assistance during natural
calamities

Key Theme of CSR: CSR is always been a part of SBI which cover various social, environmental and welfare activities
through its new and innovative products. It took customer delight seriously and started a full range of services to satisfy its
customer. Bank has a comprehensive Corporate Social Responsibility (CSR) Policy, approved by the Executive Committee of
the Central Board in August 2011.

Table 4 ICICI Bank Limited

CSR Amount CSR Report CSR BRR
Ownership Major CSR Areas
(Cr.) Publication Committee Publication
1. Education
2. Healthcare
Non – Government owned
164 No Yes Yes 3. Skill development &
organisation
sustainable livelihood.
4. Financial Inclusion

Key Theme of CSR: Banks provides sustainable banking products to cater the needs of all type of customers. It also comply
all environmental rules and regulation stated by the government. There is a proper use of renewable energy for long term
sustainability.

Table 5 Punjab National Bank

CSR Amount CSR Report CSR BRR
Ownership Major CSR Areas
(Cr.) Publication Committee Publication
1. Assistance during natural
calamities
Government owned As a section annual 2. Healthcare
293.75 No Yes 3. Training and development
organisation report
activities for farmers
4. Tree Plantation
5. Blood Donation Camps
6. Distribution of Artificial Limbs

Key Theme of CSR: CSR is an integral part of Bank corporate strategy. Giving back to the society is the motive behind these
activities for future generation. It involves its staff to undertake such activities for long term sustainability. They believe
being responsible for society, environment and all stakeholders.

Table 6 HDFC Bank Limited

CSR Amount CSR Report CSR BRR
Ownership Major CSR Areas
(Cr.) Publication Committee Publication
1. Education
2. Environment
3. Community welfare.
Non – Government owned 141.01
No Yes Yes 4. Training for sustainable
organisation
livelihood.
5. Financial Inclusion/
literacy

Key Theme of CSR: HDFC believes inclusive growth and development of society in which they operate and therefore
products and services focused on well being of population, environment, employees, internal and external stakeholders and
customer with utmost ethical governance.

Table 7 Bank of Baroda

CSR amount CSR Report CSR BRR
Ownership Major CSR areas
(Cr.) Publication committee Publication
1. Education
2. Healthcare
Government owned 14.98
No No Yes 3. Women welfare
organisation
4. Social welfare
activities.
130 Twelfth AIMS International Conference on Management

Key Theme of CSR: As a responsible corporate citizen, it has been the endeavour of your Bank to empower the community
through socio-economic development of the underprivileged and weaker sections.

Table 8 Canara Bank

CSR amount CSR Report CSR BRR
Ownership Major CSR Areas
(Cr.) Publication Committee Publication
1. Education
2. Healthcare
3. Charities/Culture/ Sports.
4. Social welfare and relief.
Government owned As a section annual
41.97 No Yes 5. Energy conservation.
organisation report
6. Women welfare.
7. Skill Development.
8. Chief Minister Relief
fund.

Key Theme of CSR: Bank is engaged in varied Corporate Social Responsibility (CSR) activities. CSR initiatives of the Bank
are multifarious, covering activities like training unemployed rural youth, providing primary health care, drinking water,
community development, empowerment of women and other social initiatives.

Table 9 Bank of India

CSR amount CSR Report CSR BRR
Ownership Major CSR areas
(Cr.) Publication Committee Publication
1. Alternate/Renewable Energy
2. Potable Water
3. Healthcare & Medical Facilities
4. Helping Physically Handicapped
5. Helping Senior Citizens/Destitutes
Government
As a section annual 6. Education
owned 7.83 No Yes
report 7. Food & Nourishment
organisation
8. Women Safety
9. Supporting Families of Ex-
Servicemen
10. Training & Skills Development
11. Environment

Key Theme of CSR: Bank is in step with the new thought of measuring performance on the basis of economic impact, social
impact, and environmental impact in its task of inclusive growth. Team Bank of India believes that it is its foremost duty to
contribute towards the lives of various stakeholders like Customers, employees, shareholders, communities and environment
in a positive manner through all aspects of its operations, thereby serving the interest of the society at large.

Table 10 Axis Bank Limited

CSR Amount CSR Report CSR BRR Major CSR
Ownership
(Cr.) Publication Committee Publication areas
1. Education
Non – Government owned
51.79 No Yes Yes 2. Healthcare
organisation
3. Livelihood

Key Theme of CSR: CSR is intrinsically weaved into bank’s philosophy of creating enduring value for all stakeholders. The
vision and mission of best articulate this philosophy. Bank engage in to fulfil the needs of business sustainability a
responsibility building upon principle like ethics, transparency, accountability, product sustainability, employee well being,
stakeholder engagement, environment protection and inclusive and equitable growth.

Table 11 IDBI Bank Limited

CSR amount CSR Report CSR BRR
Ownership Major CSR areas
(Cr.) Publication Committee Publication
1. Education
2. Healthcare
Government owned 3. Gender equality and socio
12.2 No Yes No
organisation economic empowerment.
4. Rural development projects.
5. Promotion of sports activities.
Twelfth AIMS International Conference on Management 131

Key Theme of CSR: Bank understands the importance of how CSR activities can bring about a meaningful and lasting
improvement in the lives of the marginalised sections of society. In that sense, CSR is a way of life at IDBI Bank, ingrained
into your Bank’s corporate philosophy.

Table 12 Union Bank of India

CSR Amount CSR Report CSR BRR
Ownership Major CSR areas
(Cr.) Publication Committee Publication
1. Education
2. Healthcare
Government owned
3.77 No Yes Yes 3. Community welfare.
organisation
4. Shelter for old and
orphans.

Key Theme of CSR: Union Bank of India believes that Corporate Social Responsibility (CSR) is directly linked to the core
business of the bank which is a financial intermediary. It encompasses the initiatives taken by the Bank to add social,
environmental and economic value in all its activities to make a positive, sustainable impact on both the society and the
business. The Bank believes that businesses, civil society, government, and development agencies should work together to
improve infrastructure and services whereby they can each use their core competencies to help overcome any obstacles.

Figure 1 Comparative View of Top 10 Banks with Respect to CSR Contribution

As banks were selected on the basis of total income generated in 2013 – 14, it is apparent that banks with high income
margin contribute good amount in CSR activities. Clearly SBI, ICICI, PNB and HDFC are top four banks in the list.

Table 13 Major Activities Reported by Banks

Major Areas of CSR Activities Number of Banks Percentage
Education 9 90
Healthcare 9 90
Skill development and training and development activities for sustainable livelihood 6 60
Environment 4 40
Community welfare and development 5 50
Women empowerment 5 50
Assistance during natural calamities 2 20
Financial inclusion 2 20
Development of culture and sports 2 20
Support to disabled, Ex-serviceman families and senior citizen 2 20
Energy conservation 2 20
others 3 30
Other activities: Assistance to poor, Donation, contribution to CM fund, etc

It is clear from the above table that banks concentrate on few major activities to spend their CSR budget. Education,
healthcare, skill developments for sustainable livelihood are on top of this list.

5. Conclusion
Banks plays a paramount role in the development and growth of Indian economy. It serves as a blood in body. This is the
132 Twelfth AIMS International Conference on Management

reason that there are 40 banks in the list of top 500 companies. The result indicates that:
 Banks are far behind the other companies as none of the above banks publish separate CSR report or sustainability
report even few of them does not publish business responsibility report also.
 Total income and size of banks are very important factor in CSR contribution. Banks with high income contributes
more towards such activities.
 Concentration on social issues is more in comparison to environmental issues, it may be possible because banks does
not harm environment directly.
There is a scope for development of separate CSR or sustainability report according to important parameters to measure
actual position. Banking sector is different from other service sector so government need to focus more on functioning and
role in progress of society through CSR activities

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