IN INDIA
Dr.B.Shailaja
ABSTRACT
KEYWORDS:CSR,Banks,Skills,Empowerment.
INTRODUCTION:
ThehistoryofCSRisrelativelyasoldasthatofcompanies(Bedi,2009)butwas notarticulatedformallyuntilpresently TheconceptofCorporateSocialResponsibilityinitspresentformactualizedin1950'swhenHowardR.Bowenwrotea landmarkbook“TheSocialResponsibilitiesofaBusinessman”(Carroll,1991). Thetraditionalconceptofsocialresponsibilityofbusinessdefinedthatanenterpriseproducesgoodsandrendersservicesforprofitmaximisation,andthenitis consideredtobesociallyaccountable(Kapoor&Sandhu,2010).Therehasbeen ashiftfromthisclassicalviewofCSRtowardsmodernsocialresponsibilityof business enterprises. The modern concept of corporate social responsibility statesthatthebusinessentitiesintheirusualprocessofbusinessdecisionmaking should pay due attention to the social interests of the people in the community (Sarkar,2005)becauseitisnotjustaneconomicentity;itisasocialentitytoo.
Friedman (1970) was the stern critic of this emerging concept of CSR and stronglyprofessedthat'thesolesocialresponsibilityofbusinessistoincreaseits profitsonly'.
Bowen(1953)definedCSRasanobligationforbusinessenterprisestoaccount certainfactorsduringthecourseoftheirbusinessactivities.EuropeancommissiondefinedCSRas“theconceptthatanenterpriseisaccountableforitsimpact on all relevant stakeholders. It is the continuing commitment by business to behave fairly and responsibly, and contribute to economic development while improvingthequalityoflifeoftheworkforceandtheirfamiliesaswellasofthe localcommunityandsocietyatlarge”.Themainphilosophybehindthisconcept istogivebacktothesociety Carroll(1991)statedthat“thesocialresponsibility ofbusinessencompassestheeconomic,legal,ethical,anddiscretionaryexpectationsthatsocietyhasoforganizationsatagivenpointintime.”CSRisallabout whatabusinessentitydoestopositivelyinfluencethesocietyinwhichitexists (Sandhu&Kapoor,2005).
TheIndiangovernmenthadrecommendedthatallIndianbusinessesdevote2% of their income to charitable causes. It generates US$ 2 billion (or $87 billion) annually Governmentmandatesarenotnecessary Evenbackthen,Indiancorporations raised awareness about the need to invest more in social interactions withtheirstakeholdersandcustomers.TheIndianfinancialindustryisnotlaggingbehind.InAugust2011,StateBankofIndia(withtheIndiangovernmentas theprimaryinvestor)statedthatitwillinvestUS$2million(orroughly45,977 million)inthisscheme,whichincludedprovidingfanstoschoolsnearall13,000 of its bank branches. This announcement by India's largest bank signals the increasingspeedatwhichIndianbanksmayattempttocatchupwiththeirpeers through Corporate Social Responsibility (CSR) initiatives to develop relationshipswiththeirstakeholders.
The Reserve Bank of India (RBI), which oversees all Indian banks, has urged themtopayspecialattentiontoincorporatingsocialandenvironmentalconsiderations into their daily operations. The Ministry of CorporateAffairs, GovernmentofIndia,issuedthe2009CorporateSocialResponsibilityVoluntaryGuidelines,whichstatethat"CompaniesshoulddisseminateinformationonCSRpolicies,activitiesandprogresstoalloftheirstakeholdersandthegeneralpublicina structuredmannerthroughtheirwebsite,annualreports,andothermedia."Asa result, many firms actively participate in CSR efforts to project their corporate brandintheeyesofconsumersandotherstakeholders.
Giventhattheorganizationsarerequiredtogivetheirstakeholdersaccurateand responsibleinformationabouttheiractivities,theaforementionedjustifications makeacompellingargumentforanalyzingthefinancialreportsandwebsites.As aresult,datafromwebsites,annualreports,andsustainability/CSRreportsare examinedforeach.
Ÿ Analysis of CSR disclosure practices by Indian private and public sector banks;
Ÿ Studyclientawarenessaboutthebanks'CSRpractices;and
Ÿ Survey the degree of consumer perceptions for CSR activities to be adoptedbypublicandprivatesectorbanks.
LITERATURE
REVIEW:
Oeyono, J., Samy, M., & Bampton, R. (2011) explored the causal relationship between the CSR and financial performance of the top fifty Indonesian listed companiesfortheperiodoffiveyearsi.e.2003-07.GlobalReportingInitiative guidelines were used as a basis to measure corporations CSR level while EBITDAand EPS as financial performance measures.The study revealed that there was a positive relationship between CSR and corporation's financial performancebutitfoundtobeweaki.e.0.18ofCSRandEBITDAand0.16forCSR and EPS. The study also revealed that all Indonesian corporations conducted CSRintheirbusinessoperations.
Choi,J.S.,Kwak,Y.M.,&Choe,C.(2010)examinedtherelationbetweenCSR and corporate financial performance of 1222 firm of Korea for the period of 2002-08listedontheKRXforwhichKEJIindexwasavailable.KEJIindexwas usedasbasistomeasurescorporationsCSRlevelandROA,ROEandTobin'sQ as financial performance measures.The study showed that the equal-weighted CSRindexwaspositivelycorrelatedwithROAonlywhilestakeholder-weighted CSR index was positively correlated with all the three performance measures. The study also revealed that the high level of corporate financial performance hadapositiveeffectonthestakeholder-weightedCSRindex.
Mukherjee,A.,&Bird,R.(2016)investigatedthedriversthatcause223companiestotakeonCSRexpenditurethroughasurvey Itfoundfromthestudythatthe maindriverwasthestrategicagendaofcompaniestodifferentiateitselffromotherspreferablythanethicalandmoralmotivations.Italsooutlinedthatthesize, ageandtypeofownershipofcompanieslargelyaffecttheirattitudetowardsCSR spending.
Makni,R.,Francoeur,C.,&Bellavance,F (2009)appraisedthecausalrelationship between corporate social performance and financial performance of 179 publicly held Canadian companies using Granger CausalityApproach for year 2004and2005.ItfoundfromthestudythatthecompositeofCSPmeasureswere not significantly related with financial performance, except for market return. WhileindividualmeasureofCSPi.e.environmentaldimensionwasnegatively associatedwithfinancialperformancemeasures(ROA,ROEandmarketreturn). Multi-NationalCorporations'(MNCs)non-regulationwithrespecttotheirsocial and environmental responsibility has had significant implications, although on themorevulnerableandvoicelesspartsoftheglobalcommunityasEngoboetal. (2010)reported.Theyalsosuggestedthatthescopeofglobalregulationsneeds tobebroadened.
Jayashree(2010)notedthatIndianbankingasawhole,aspartoftheCSR,should takeseriouslytheissueofopeningno-frillaccountsandmakedeliberateefforts toachievefinancialinclusion.
SureshandSudeepta(2011)indicatedthatthemeasuressupportingCSRshould bestrictlyaddressedandimplemented.Thefinancialinstitutionwillfacealotof problems unless and until environmental authorities become stricter and more stringentaboutthis.Ifonlybusinessinstitutionsrecognizedbroadersocialgoals intheiractivities,theremaybegeneral,socialandeconomicbenefitsthatwould addtosociety
Chaudhury et al. (2011) conducted a comprehensive study of all the banks and financial institutions involved in socio-economic development, rural development,andcommunitydevelopment.Theyconcludedthatallfinancialandbanking institutions share priority sector lending, microfinancing, MSME finance, andenvironmentalexcellenceproject.
AstudyconductedbySenthikumaretal.(2011)ontheimpactofCSRoncustomersatisfactioninbankingservicefoundthatcustomersatisfactionisthemediatingfactorinthequalityofbankingservice,andtheCSRisthemostinfluential factorforcustomersatisfaction.Customersatisfactionisthemostimportantpredictor of the quality of the banking services.The management will ensure that theirclientsprovideequalandtimelyserviceinthebankingenvironment.CSR hasastrongimpactoncustomersatisfactionabouttheefficiencyofthebanking service.
JayashreeandNeeta(2011)disagreeoverCSRpracticesandratingsintheIndian bankingsector.TheyinformedthatCSRisaconceptwherebyfinancialinstitutionsconsidernotonlytheirproductivityandgrowthbutalsothewell-beingof society and the environment by assuming responsibility for the impact of their activities on shareholders, employees, customers and NGOs represented civil society
CSR is an important source of prestige, capable of generating economic value overtime.Inaddition,thereisarelationshipbetweenCSRandthebanks'CorporateReputation(CR),whichisveryimportantinmeetingtheexpectationsofall stakeholders,asTrottaetal.(2011)quoted.AnormforratingCSRactivitiesin bankingsectorsneedstobeestablished,anditcanpavethewayforCSRaccountability,assuggestedbySanjay(2012).
Saxena (2012) claimed that the primary incentive for companies to exercise socialresponsibilityshouldbeamoralandethicalone,ratherthanfinancial.CSR thereforehasanimportantroletoplay,particularlyinbuildingconfidenceinconsumers'minds.
Mukherjee(2012)mentionedthattheRBI,togetherwiththecommercialbanks, mustunderstandthattheirviabilityandprofitabilitywillonlybesustainedfora longerperiodoftimeifthereistotalfinancialinclusion.Itisalsofoundthatthe governments (central as well as state) understand that the pro-poor measures theyaretakingintheformofsubsidiesorwelfareschemesdonotactuallyreach thedeserving.Theonlysolutionisdirecttransferofcashtoindividuals,which againdemandstotalfinancialinclusion.
Sigurthorsson(2012)observedthatthebanksseemedmainlyasaphilanthropic activitytobeattractedtotheideaofCSR.Ithasbeenmentionedinparticularthat themannerinwhichthebanksinquestionconceivedCSR,i.e.primarilyinterms ofstrategicphilanthropy,wasgravelymisguided.
AndreaandIgnacio(2012)mentionedthatwhilecompaniesareincreasinglyintegratingCSRintotheirbusinessstrategies,therearesomeaspectsoftheirmanagementthatdetractfromtheirsuccess,suchastheircommunicationorthemeasurementofitsresults.
According to Singh andAgarwal (2013), in order to project a more socialistic image,bankswithstateorfederalgovernmentsaslargeshareholdersmustfocus theirattentiononCSRareasdifferently
SharmaandMani(2013)mentionedthatwhiletheIndianbanksaremakingsustainedeffortsintheCSRareas,thereisalottobedone.Therearesomebanksthat donotevensatisfytheregulatoryrequirements.Publicsectorbankshavemade the largest contribution to CSR activities overall. In this area, private sector banksandforeignbanksremainlagging.
IntheirstudyKshitizandAmar(2013)mentionedthatCSRisnotcompulsoryin Nepal.Bankshave,however,madevoluntarydisclosures.Inaddition,growthof childrenandwomen,religiousengagement,gamesandathleticevents,andblood donationswereamongthedrivingfieldsforCSRcoverage.
DeepikaandRama(2014)reportedthatthereisnomandatoryreportingrequirement for CSR activities that trigger negligence on reporting issues. They also noted that some banks are clearly making false claims about their socioenvironmentalefforts.
RESEARCHMETHODOLOGY:
Thestudyisbasedonsecondarysource.Thetop6bankswereselectedtoanalyze theCSRdisclosurepracticesforthepresentstudy Outoftop6banks,top3publicsectorbanksandtop3privatesectorbankswereselectedforthestudy
PublicBanks: Ÿ StateBankofIndia Ÿ PunjabNationalBank
BankofBaroda
PrivateBanks:
ICICIBank
HDFCBank
KotakMahindraBank
Annualreportsfortheyear2021-22hasbeenstudiedtoanalyzetheCSRdisclosurepracticesoftheseselected6banksofIndia.Researcherhasidentifiedeach CSRactivitiesdisclosedbythebanksintheirannualreports.
Tableno1:Top3PublicSectorBanksdisclosingCSRActivitiesintheir respectiveannualreports.
SBI PNB BOB Education Education Education&Training Healthcare Sustainability Outofabove,expenditure forRSETIs
Swachhata,Environment ProtectionandSanitization Corporate Volunteering Health&Care EmpowermentofWomen andSeniorCitizens SocialInvestments WomenWelfare/ Empowerment SkillDevelopment GramSampark Abhiyan SocialWelfare/Economic Development
SBIChildren'sWelfareFund Health NationalDonation GreenInitiatives Collaboration Promotionof Sports OtherCSR Initiatives
Source:AnnualReports
Tableno2:Top3PrivateSectorBanksdisclosingCSRActivitiesintheir respectiveannualreports.
ICICI HDFC KotakMahindra Bank
Covid-19reliefactivities Education Education& Livelihood
Urbanlivelihood,Rurallivelihood andsocial&environmental projects
Ruraldevelopmentandrelated activities
Rural Development Healthcare
ChildrenAnd Women Environment& Sustainable Development
SocialAwareness SocialCommunity Welfare Sports
Education,healthcare,empowering theeconomicallybackwardgroups Health Relief& Rehabilitation
Disastermanagement&others, includingdonations Others Health
Source:AnnualReports
CONCLUSION:
ThepresentpaperstudiestheCSRactivitiesoftop3publicsectorandtop3privatesectorbanksinIndia,andratingtheirperformanceonthebasisofparameters:Majordisclosurewasmadeineducation,healthcarebyallthetop3public and top 3 private sector banks under CSR practices. SBI discloses about Swachhata,EnvironmentProtectionandSanitization,EmpowermentofWomen andSeniorCitizens,SkillDevelopment,SBIChildren'sWelfareFund,National Donation. PNB took an initiative for the development of the society through sustainability, corporate volunteering, social investments, and Gram samprak abhiyan. Green initiatives were also taken by PNB and it is the only bank disclosesthedetailsaboutpromotionofsportsactivities. BankofBarodamakesa contribution towards CSRActivities through making expenditure for RSETIs,
Women Welfare/ Empowerment, Social Welfare/ Economic Development.
ICICI Bank contributes towards Covid-19 relief activities, urban livelihood, rural livelihood and social & environmental projects, rural development and related activities, Social Awareness, empowering the economically backward groups,Disastermanagement&others,includingdonations.HDFCcontributes onCSRactivitiesunderRuralDevelopment,ChildrenandWomen,SocialCommunity Welfare. Kotak Mahindra Bank contributes towards Healthcare, Environment & Sustainable Development, Sports, and Relief & Rehabilitation. Kotak Mahindra Bank only the private bank discloses the details about sports activities. ItisconcludedthatPNBcontributesmoretowardsCSRactivitiesand Kotak Mahindra Bank makes contribution towards new activities under sports andreliefandrehabilitation.
REFERENCES:
I. AndersonEW,FornellCandMazvancherylSK(2004),“CustomerSatisfactionand ShareholderValue”,JournalofMarketing,Vol.68,No.4,pp.172-185.
II. ChaudhurySK,DasSKandSahooPK(2011),“PracticesofCorporateSocialResponsibility(CSR)inBankingSectorinIndia:AnAssessment”,ResearchJournalonEconomics,BusinessandITC,Vol.4,pp.110-127.
III. Deepika D and Rama M (2014), “CSR Practices in Indian Banking Sector”, Global JournalofFinanceandManagement,Vol.6,No.9,pp.853-862.
IV EngoboE,RhuksA,PatrickOetal.(2010),“Corporations,CSRandSelf-Regulation: WhatLessonsfromtheGlobalFinancialCrisis?”GermanLawJournal,Vol.11,No.2, pp.230-259.
V JayashreePandNeetaA(2011),“CSRPracticesandRatingsinIndianBankingSector”,InternationalJournalofResearchinCommerce,Economics&Management,Vol. 1,No.5,pp.129-133.
VI. KostyukAN,MazghovyiYaI,RiabichenkpAetal.(2009),“CorporateSocialResponsibilityinBanks:AnInternationalOverview”,pp.1-32,UkrainianAcademyofBanking,NationalBankofUkraine,Sumy
VII. SinghRandAgarwalS(2013),“DoesCSROrientationReflectStakeholderRelationshipMarketingOrientation?AnEmpiricalExaminationofIndianBanks”,Marketing Intelligence&Planning,Vol.31,No.4,pp.405-420.
VIII.Suresh C B and Sudeepta P (2011), “CSR and Performance: The Story of Banks in India”,JournalofTransnationalManagement,Vol.16,No.1,pp.20-35.