Corporate Social Responsibility in Indian Banking Industry: A Case Study of State Bank of India and ICICI Bank.
The role played by the banks in fulfilling corporate social responsibility is rooted in its Corporate Governance philosophy. This philosophy of the banks necessitate the compliance of ethical practices in its business which includes to grow with profits and to protect the interest of shareholders, stakeholders and society by adopting best practices and standards. By adopting corporate social responsibility practices, banks can increase their long term prosperity and survival. In the recent years the Indian banks are trying to show their more socially responsible behavior in an effective manner. Through CSR practices, the banks are focusing on providing financial services in unbanked areas, poverty eradication, health and medical care, rural area development, education, environment protection etc. The Reserve Bank of India (RBI) has also insisted on banks for adopting corporate social responsibility practices so as to ensure sustainable development of an economy. Thus, as per the instructions of RBI, the banks have started many social and economic welfare programmes. RBI circulated a notice on December 20, 2007 titled as "Corporate Social Responsibility, Sustainable Development and Non-Financial Reporting-Role of Banks". The major issues discussed in the notice were regarding Corporate Social Responsibility, Sustainable Development and Non-Financial Reporting.
The RBI has followed many international initiatives to highlight the importance of the notice like United Nations Environment Program Finance Initiative, Global Reporting Initiative, International Finance Corporation, The Equator Principle and Declaration on Financial Institutions. In addition to these international initiatives, the report of RBI also discussed other important and urgent issues regarding Global Warming and the extent of problem etc. The RBI has insisted that :
(i) Banks should use multiple channels to expand their reach for financial inclusion.
(ii) Banks should give information about their corporate social responsibility efforts to the public and should include such information in their annual accounts.
(iii) In December 2007 RBI advised banks to focus more attention towards the issue of corporate social responsibility by increasing the awareness of banks.
(iv) The RBI has also insisted on the human resource development programmes of banks.
(v) The National Housing Bank, Deposit Insurance and Credit Guarantee Corporation of India, Bharatiya Reserve Bank Note Mudran Private Limited, all these units are following RBI guidelines.
The various studies reviewed are:
Dhingra and Mittal (2014) studied the CSRpractices in Indian banking sector. The paper discussed the major thrust areas of CSR practices in Indian banks common in public and private sector banks which include children welfare, community welfare, education, environment, healthcare, poverty eradication, rural development, vocational training, women's empowerment, protection to girl child and employment. The study found that the banks are using CSR practices as a marketing tool and are implementing CSRin an ad-hoc manner. The study suggests that the banks should provide training to its employees on the environmental and social risks. Further, the financial institutions should also contribute its efforts in fulfilling its social responsibility.
Dake and Pole (2011) studied the corporate social responsibility practices of selected private sector banks viz., HDFC Bank, ICICI Bank, KrurVysya Bank, ING Vysya Bank and Axis Bank. The paper has also mentioned the CSR ratings of these selected banks. The study found that due to absence of mandatory provisions regarding CSR reporting practices, some of the reporting banks were not showing true picture of their socio-environmental efforts. It stressed the need for more stringent norms for implementation of social responsibility principles.
Singh et. al (2014) studied the corporate social responsibility initiatives undertaken by ICICI Bank along with the expenditure incurred by the bank for corporate social responsibility for five years. The study found that the bank has increased its expenditure on corporate social responsibility practices for five years included in the study. Further, the study emphasized that the banks should make the public aware about their initiatives so that the banks can get benefit from such efforts.
Sharma and Mani (2013) analyzed the corporate social responsibility activities carried out by Indian commercial banks for the year 2009-10 to 2011-12. The various variables used in the study include rural branch expansion, priority sector lending, environment protection, community welfare, women welfare, new initiatives related to CSR, financial literacy, education and farmers' welfare. The study found that the public sector banks are having highest contribution in CSR activities while private and foreign banks are lagging behind in this case. It was found the some banks are not even meeting the regulatory requirements.
Objectives of the study
The objectives of the study are:
1. To study the Corporate Social Responsibility programs and focus areas of Public Sector Bank i.e. State Bank of India (SBI) and Private Sector Bank i.e. ICICI Bank.
2. To analyze and compare the spending of SBI and ICICI Bank on Corporate Social Responsibility activities.
The study is based on the secondary data. The data has been collected from the annual reports of the State Bank of India and ICICI Bank from their respective websites. The period of the study is four years, that is, from the year 2009-10 to 2015-16. The average has been taken to show the trend of expenditure of banks on CSR activities during the period of study.
About SBI Bank
The SBI bank was founded in 1956. The headquarters of the bank is situated in Mumbai. The State Bank of India is the largest state-owned banking and financial services company in India. Arundhati Bhattacharya is the Chairman of the bank and is the first women to hold the post. The Bank is operating in four business segments, namely Treasury, Corporate/ Wholesale Banking, Retail Banking and Other Banking Business. The Bank is providing a wide range of financial services through its subsidiaries, which include life insurance, merchant banking, mutual funds, credit card, factoring, security trading, pension fund management and primary dealership in the money market.
About ICICI Bank
The ICICI Bank is the largest private sector bank in India. The mission of the bank is to promote inclusive growth in India through initiatives in the area of primary healthcare, elementary education, skill development and sustainable livelihoods and financial inclusion. In 2000, ICICI bank's Social Initiative Group (SIG), a non-profit group was set up within ICICI Bank. Its main focus is on primary health, elementary education and access to finance. In 2008, ICICI Foundation was set up with a view to significantly expand the activities in the areas of CSR activities. As on March 31,2013, the total assets of the bank were Rs. 5367.95 billion and profit after tax was Rs. 83.25 billion. The bank has framed its Corporate Social Responsibility (CSR) policy that ensures compliance with section 135 of the companies act, 2013.
Corporate Social Responsibility Programs of SBI are:
(i) Gift Drishti: 1st October has been chosen to eliminate Cataract blindness.
(ii) Read India Pledge: Partnered with Pratham to teach children to read and write.
(iii) Programs to spread awareness on leprosy on World Leprosy Day, that is, 30th January.
(iv) Sponsorship to sports events like T20 to help the blind.
The focus areas of the CSR activities of State Bank of India are:
(i) Supporting Education
(ii) Supporting Healthcare
(iii) Assistance to poor and underprivileged
(iv) Environment Protection
(v) Entrepreneur development program
(vi) Assistance during Natural Calamities like floods/droughts etc.
ICICI Group Corporate Social Responsibility Programs are:
(i) Read to Lead: Read to lead is an initiative of ICICI Bank to facilitate elementary education for disadvantaged children in the age group of 6-13 years.
(ii) MITRA (ICICI Fellows Program): MITRA is an affiliate of CSO Partners that is focused on addressing the challenge of human resources for civil society organizations (CSOs). In partnership with CSO Partners and MITRA, ICICI Foundation proposes to launch an ICICI Fellows Program.
(iii) CARE (Disaster Management Unit): A grant of Rs.5.00 million has been given to CARE in India to enable it to prepare for any future disasters that may strike and respond immediately with the required relief efforts.
(iv) Rang De (Micro Enterprise Development):'Rang De', which is an affiliate of CSO Partners, has partnered with ICICI Venture to roll out funds for the microenterprise development in rural and semi-urban locations.
The focus areas of the CSR activities of the ICICI Bank are:
(i) Elementary Education
(ii) Skill Development and Sustainable Livelihoods
(iii) Primary Healthcare
(iv) Financial Inclusion
(v) Poverty Eradication
(vi) Environment Protection
(vii) Support employee engagement in CSR activities
CSR spending of SBI and ICICI Bank
The total spending of the State Bank of India and ICICI Bank has been analyzed to study the trend of the expenditure of banks on the corporate social responsibility activities.
Table 1 clearly shows the total spendings of SBI from the year 2009-10 to 2015-16. It shows that the bank has increased its spendings on CSR activities over the period of time. It was Rs. 19.72 crores in the year 2009-10 and 143.92 crores in the year 2015-16. The average spending of the bank comes out to be 92.465 crores.
Table 2 shows that the total spending of ICICI bank increased from 107.89 crores in the year 2009-10 to 112.93 crores in the year 2010-11. But in the year 2011-12 there was decrease in its CSR disbursements which was registered as 75.9 crores. Again in the year 2012-13, the bank increased its CSR expenditure and rose to 116.55 million. The average spending of the bank comes out to be 103.32 crores.
The analysis of the spending of both the banks that is SBI and ICICI Bank shows that the banks have increased their spending during the study period. But the average spending of the private bank, that is, ICICI Bank is more than that of State Bank of India. Thus it can be concluded that these days the banking industry in India is giving due importance to the Social Responsibility and they try to cater to all the important areas which need to be focused like health, education, sanitation, etc. But still more needs to be done.
D. Crowther (2000): Social and Environmental Accounting (London: Financial Times Prentice Hall), p. 20.
Dhingra, D and Mittal, R. (2014): "CSR Practices in Indian Banking Sector", Global Journal of Finance and Management, Vol. 6, No. 9, pp. 853-862.
Dake, J.P. and Pole, N.A. (2011): "CSR Practices and Ratings in Indian Banking Sector", International Journal of Research in Commerce, Economics and Management, Volume 1, Issue 5, September, pp. 129-133.
Singh, N. Srivastava, R.; and Rastogi, R. (2014): "A Roadway to Corporate Social Responsibility: A Case Study of ICICI Bank", IOSR Journal of Business and Management, Vol. 16, Issue 1, Ver. IV, January, pp. 38-42.
Sharma, E. and Mani, M. (2013): "Corporate Social Responsibility: An Analysis of Indian Commercial Banks", AIMA Journal of Management and Research, Vol. 7, Issue %, February.
Table 1: Total Spending of SBI on CSR activities Total Spending SBI (amount in crores) 2009-10 19.72 2010-11 24.44 2011-12 71.18 2012-13 123.27 2013-14 148.93 2014-15 115.80 2015-16 143.92 Average 92.465 Source: www.sbi.co.in Table 2: Total Spending of ICICI Bank on CSR activities. Total Spending ICICI Bank (amount in crores) 2009-10 107.89 2010-11 112.93 2011-12 75.9 2012-13 116.55 2013-14 132.94 2014-15 156.0 2015-16 172.0 Average 124.887 Source: www.icicibank.com
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|Publication:||Political Economy Journal of India|
|Article Type:||Case study|
|Date:||Jul 1, 2018|
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