Corporate Social Responsibility in Banks

corporeal mixer business in Banks S. Kavitha1 Abstract collective cordial duty stands for work contribution to sustainable suppuration and c all(prenominal)places fraternitys spry familiarity in different fields, gentle rights, human resources, relations with clients, suppliers, and other pursuit holders, corporal governance, purlieu and contribution to residential argona and companionship. The hearty responsible attitude is inviolate blow up of the identity of pecuniary institutions like banks, and it is one of their distinctive features.The modestness Bank of India has asked the banks to pay extra attention towards integration of social and environmental concerns in their business operations. many of the newly formed private and overseas banks are aware of the impressiveness of such a step and wherefore are having an active CSR discussion section in their banks. This paper is an attempt to explain the concept of corporate social function and the diff erent CSR practices followed by banks in India. Key Words CSR incorporated companionable Responsibility, Friedmans View, Carrolls View, Discretionary Responsibility somatic Social Responsibility in Banks S. Kavitha2 Introduction Corporate social responsibility stands for business contribution to sustainable development and covers high societys active participation in different fields, human rights, human resources, relations with clients, suppliers, and other stake holders, corporate governance, environment and contribution to lodge and society. The concept of social responsibility proposes that a private corporation has responsibilities to society that extend beyond devising profit.Social responsibility is the way of life for most business cheeks. It enables e genuinely last(predicate) such activities ranging from providing safe products and service to giving a portion of friendships profit to welfare organization. The social responsible attitude is integral part of the id entity of financial institutions like banks, and it is one of their distinctive features. The Re reply Bank of India has asked the banks to pay special attention towards integration of social and environmental concerns in their business operations.Many of the newly formed private and conflicting banks are aware of the importance of such a step and therefore are having an active CSR department in their banks. Concept of Social Responsibility Corporate social responsibility is the sense of obligation on the part of companies to build social criteria in to their strategic purpose- devising. The concept implies that when companies evaluate decision from an critical perspective there should be presumption in esteem of adopting course of action that enhance the welfare of society at large. The goals selected power be quite specific. To enhance the welfare of communities in which partnership is based. To break the environment To empower employees to give them a sense of self worth. contrasting public opinions on social responsibility Friedmans Traditional View of crinkle Responsibility Urging a return to a laissez-faire earth(a) economy with a minimum of government regulations, Friedman argues against the concept of social responsibility. spell Smith and Milton Friedman, economists, according to them the only responsibility of business is to perform its frugal functions efficiently and provide goods and services for society and earn maximum profits.By doing so business performs its economic functions and leaves the social functions to other institutions of society, such as the government. A businessperson who acts responsibly by cutting the price of the souseds product to prevent inflation or by making expenditures to s accommodate pollution, or by hiring the hard-core unemployed, according to Friedman, is spending the shareowners money for general interest. Even if businessperson has shareholder permit or encouragement to do so, he or she is stil l playacting from motives other than economic, in the long run it whitethorn harm the society the firm is trying to help.Friedman referred o the social responsibility of business as fundamentally subversive doctrine and stated that There is one and only one social responsibility of business, to use its resources engage in activities de sign to increase its profits so long as it stays at heart the rules of the game, which is to say, engages in open and free competition with turn out deception of fraud. But this view is severely criticized on several grounds. On the other extreme, there is setback view, which favors the position that it is imperative for businesses to be socially responsible.This is based on the purpose that business organizations are a part of society and present to serve primarily societal interests earlier than narrow economic objectives such as profit maximization. In doing so they gather in to deal with social concerns and issues and read to allocate reso urces for solving social problems. Carrolls four responsibilities of business. Archie Carroll proposes that the managers of business organizations have four responsibilities Economic ResponsibilitiesEconomic responsibilities of a business organizations management are to produce goods and services of value to society so that the firm can repay for its creditors and shareholders. Legal Responsibilities Legal responsibilities are specify by governments in constabularys that management is expected to obey. For eg, U. S. business firms are mandatory to hire and promote pile based on their credentials rather then to discriminate based on non-job-related characteristics such as race, sexual practice or religion. Ethical Responsibilities Ethical responsibilities of an organizations management are to ollow the broadly speaking held beliefs about behavior in a society. E. g. , Society principally expects firms to work with the employees and the community is planning for layoffs, even th ough no law may require this. The affected people can spend a penny very upset if an organizations management fails to act according to generally prevailing ethical values. Discretionary Responsibilities Discretionary responsibilities are the purely pull up stakesing obligations a corporation assumes. Examples are philanthropic contributions, training the hard-core unemployed, and providing solar twenty-four hours care centers.The difference between ethical and discretionary responsibilities is that few people expect an organization to fulfill discretionary responsibilities, whereas many expect an organization to fulfill ethical ones. Carroll lists these four responsibilities in order of priority. Social responsibility takes both ethical and discretionary but not economic and licit responsibilities. A firm can fulfill its ethical responsibilities by winning actions that society tends to value but has not yet put into law.When ethical responsibilities are satisfied, a firm can focus on discretionary responsibilities. The discretionary responsibilities of today can become the ethical responsibilities of tomorrow. E. g. , Provision of day care facilities, is moving speedyly from being discretionary to ethical responsibility. Benefits get from being socially responsible 1. Being known as a socially responsible firm may provide a company a competitive advantage. Programs to reduce pollution can actually reduce waste and maximize resource productivity. 2.Their environment concerns may enable them to way premium prices and gain brand loyalty. (Ben & Jerrys Homemade Inc. ) 3. Their trustworthiness may help them generate enduring relationships with suppliers and distributors without needing to spend a lot of quantify and money policing contracts. (Maytag) 4. They can force outstanding employees who prefer working for a responsible firm (Procter & Gamble) 5. They are more likely to be welcomed into foreign country (Levi Strauss) 6. They can utilize the go odwill of public officials for accept in difficult times (e. . Minnesota supported Dayton-Hudsons fight to block being acquired by Dart Industries of Maryland) 7. They are more likely to attract capital infusions from investors who view reputable companies as desirable long- edge investments (Rubbermaid). CSR in India India has been named among the top ten Asian countries who are paying an increasing importance towards corporate social responsibility (CSR) revealing norms, a ken says. harmonise to social enterprise CSR Asias Asian Sustainability Ranking (ASR), India was ranked fourth in the list, which was topped by Australia.The other countries in the list include China (second), Hong Kong (Third), Japan (fifth), Malaysia (sixth), Pakistan (seventh), Philippines (eighth), Singapore (ninth) and Thailand (tenth). The 2009 ASR list was dominated by Australian companies, with eight out of the top ten companies analysed coming from there, followed by India, the survey said. Howeve r, the report further said although there are increasing levels of disclosure in the Asian region, it still is generally poor compared with Europe and uniting America. In India we find surprisingly high levels of disclosure, particularly from large companies with recognize brands such as Tata and Infosys. Leading oil companies (such as ONGC and the Indian oil color Corporation) also have reasonable levels of disclosure, the report said. CSR initiatives in banks The benefits of CSR for companies include change magnitude profit, customer loyalty, trust, commanding brand attitude and combating negative publicity. CSR strategies have been embraced by the international banking community. 0 Major international private banks have signed the Equator Principles agreement which supports socially responsible development. (Eg of such banks are Citigroup, JPMorgan, Bank of America, ABN Amro, Barclays, HSBC and ING). investigate suggests that dissatisfaction is the major reason why custome rs switch banks this arises mainly because of rising fee. usually to get more favorable price, customers try to switch banks. Most of the customers have accounts in more than one bank so they find it very easy to compare the services and accordingly they do their transactions.So, customer overthrow has become an important issue for the banks. The customer loss may have an adverse effect on bank market share and profit. So if the banks concentrate more on CSR and spent more for this that will realize a good image for the banks which in turn will run many new customers to the banks and also the customer loss can be reduced. RBI guidelines on CSR The Reserve Bank of India is now rooting for environment conservation and fair social practices.The central bank has asked banks to put in place a suitable and appropriate plan of action towards lot the cause of sustainable development, with the approval of their boards. Spurred on by the worldwide momentum in sustainable development and the initiative being taken on various fronts by different organisations, including all major banks globally, Indian banks have been encouraged to actively look at corporate social responsibility, sustainable development and non-financial reporting.Among banks in India, ABN Amro Bank was the first to put out a sustainability report recently. It includes key indicators on the bank and its subsidiaries environmental (like paper, wet and electricity usage) and social governance performance. Other companies, which issue sustainability reports, include ITC, Tata Tea, Dr Reddys and Reliance. Sustainable development essentially refers to the process of maintenance of the quality of environmental and social systems in the pursuit of economic development.Non-financial reporting is grassrootsally a system of reporting by organisations on their activities, which includes environmental, social and economic accounting. surmount CSR practices in Banks Some Examples SBI State Bank of India Ap art from the normal banking operations, the Bank, as a responsible and responsive corporate citizen, seeks to reinvest part of its profit in various community welfare projects to improve the quality of life of the poor, neglected, weaker and downtrodden sections of society. In the financial category 2007-08, the Bank made donations aggregating Rs. . 11 crore to various embossment Funds and also to NGOs / Trusts / Societies for their projects with social orientation. In recognition of its contribution to homespun Community ripening, the Bank was awarded the prestigious Readers Digest Pegasus Corporate Social Responsibilities Award 2007. Infact, it was the only Bank to have received this recognition. infra a new scheme named Adoption of the Girl Child over 8,300 poor girl children have been adopted by various branches throughout the country to meet their personal and educational expenses.This is not merely a financial assistance scheme but offers emotional and psychological suppo rt to the adopted girls due to the active involvement and care of the SBI Ladies Clubs. From the Research and Development Fund, the Bank has so far extended Rs. 6. 61 crore as search grants to 71 chairs / research projects at various Universities and Academic institutions. For the current year SBI has extended 100000 Sterling Pounds to London School of Economics for establishing an India outlook and I. G.Patel Chair at their Asia Research Centre in participation with RBI. ICICI derriere An example for CSR practices by banks is the ICICI foundation. ICICI Bank runs a very active and rise up known foundation in India but there is no clear visible link of the ICICI Foundation on the website. ICICI is also very active in its support of government programs to improve the livelihoods of people. ICICI Bank has joined hand with NGOs to reach out to children in ten states helping them have break off access to education type Chartered BankThe human immunodeficiency virus/ help pandemi c is a global challenge faced by hackneyed Chartered as a business. In different developing countries HIV has a significant fix and they respond to this platform through bread and butter with HIV programme, , a global policy aimed at protecting basic human rights, promoting the health of their employees and keeping the business costs associated with HIV/ assist to a minimum. The programme is well established and focuses on the following areas fosterage sense with their employees through training Educating local people about the legal profession and treatment of HIV Strengthening their position as thought leaders in HIV/AIDS sacramental manduction their knowledge with other organisations modular Chartered, which happens to be one of the countrys largest international banks, is involved in real partnerships with local community organisations, involving active participation of its employees in their community projects. It is the human face of banks. Or what is called corporate social responsibility, the new term devised for the social service that companies do with some of their profits.The global community programme of the bank is called Believing in Life. Part of this is the internal initiative Living with HIV. An extension of the programme in Africa, it seeks to create awareness about this deadly disease and thus help prevention by educating all its staff across the different countries from where the bank operates. Banks like HDFC, SBI, ICICI, HDFC, Standard Chartered Bank are now active in a host of areas including primary education, women empowerment, rehabilitation of poor, and aged environmental issues Future of CSRThe Corporate Social Responsibility has increased in importance around the world. The world becomes a global village in the information technology era. Sharing and accessing of information become very easy. All big companies are expanding their business opportunities all over the world. Simultaneously the CSR activities also expanding s peedily where company initiatives started. right away these days every company feels CSR is unavoidable and responsible thing. Moreover companies allocating depart budget and deploying professionals for CSR initiatives.It shows that it is emerging as a powerful thing in social development sector. The Corporate Social Responsibility (CSR) is high on every corporate agenda. Social commitment is an essential part of every company. Corporate social responsibility involves the aspiration to make a positive contribution to the progress of the company and society. If a company initiates CSR wing the company concerned need to work hard consequently on a formal, coherent and transparent policy in this field. Then only the CSR will become a potential area for development of the society.Conclusion The rapid information technology innovations are changing the face of Corporate Social Responsibility. The concept of CSR is still debatable in democratic countries. There is a major criticism in a ll over the world is corporate companies are utilizing this concept to build their business expansion. Through this concept corporate companies are liaison and lobbying with higher bureaucracy in the government to get permissions/licenses to their companies easily. Many companies are getting tax exemptions by carrying out these social development activities.The increased awareness of CSR has also come about as a result of the United Nations Millennium Development Goals, in which a major goal is the increased contribution of assistance from large organizations, oddly Multi-National Corporations, to help alleviate poverty and hunger, and for businesses to be more aware of their impact on society. There is a lot of potential for CSR to help with development in poor countries, especially community-based initiatives. CSR can be very untold useful for the financial institutions like banks to get good reputation in the society.Banks should do the CSR activities to the fullest benefit to the society and not just for the sake of doing it. References Sen, S. , Bhattacharya, C. B. , Korshun, D. (2006), The berth of corporate social responsibility in strengthening multiple stakeholder relationships a field experiment, Journal of the Academy of Marketing Science, Vol. 34 pp. 158-66. Bhattacharya, C. B. , Sankar Sen and Daniel Korschun (2008), victimization Corporate Social Responsibility to Win the War for Talent, MIT Sloan Management Review, 49 (2), 37-44 The Good Company, The Economist (2005-01-20).Retrieved on 2008-25-07 Financial Express, Wednesday, Oct 28, 2009 at 1541 hrs IST http//www. karmayog. org/csr501to1000/csr501to1000_21878. htm http//www. csbanking. com. au/ http//economictmes. indiatimes. com/News http//www. deccanherald. com/deccanherald/july202004/spt9. asp http//www. financialexpress. com/fe_full_story. php 1 S. Kavitha, MBA,MCA. ,MPhil. ,NET. , Asst. Prof, MBA, Vivekanandha Institute of Information & Management Studies, Tiruchengode, Namakkal Dt. , 637 205, Research Scholar, Anna University, Coimbatore border99421-60277, email emailprotected om 2 S. Kavitha, MBA,MCA. ,MPhil. ,NET. , Asst. Prof, MBA, Vivekanandha Institute of Information & Management Studies, Tiruchengode, Namakkal Dt. , 637 205, Research Scholar, Anna University, Coimbatore Phone99421-60277, email emailprotected com Economic Legal Ethical Discretionary (Must do) (Have to do) (Should do) (Might do) Social responsibilities