VIVEK COLLEGE OF COMMERCE

Chapter1. ROLE OF CSR IN BANKING

CONCEPT OF CSR

 Corporate social responsibility (CSR) is an expression used to

describe what some sees as a company’s obligation to be sensitive to
the needs of the stake holders in its business operations.

 CSR is closely linked with the principles of “Sustainable

Development” in proposing that enterprises should be obliged to
make decisions based not only on the financial / economic factors but
also on the social and environmental consequences of their activities.

 Corporate executives and employees in turn have strong incentives to

internalize the corporation’s statutory obligations to maximize profits,
sometimes to the extent that they abdicate their individual moral and
ethical obligation as human beings.

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NEED FOR CSR

 Banks need to be more socially responsible as for the service

sector organization business with the society has to be
predominantly in the highest denomination of social responsibility,
and more importantly banks are special and high leveraged
business.

 They have a large number of creditors and failure of one bank can
lead to the failure of many other banks as the customers use faith.

 Banks do not exist in a vacuum. They make a large contribution to

the country’s GDP growth, meet the demand for the growing
middle class contribute to infrastructure spending and reach out to
the semi urban and rural areas.

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Environment Pollution control Restoration or protection of environment

Conservation of natural resource

Energy Conservation of Energy in production and marketing

operations. Efforts to increase the energy efficiency of
products. Other energy saving programs.

Fair Business Employment and advancement of women and minorities.

Practices Employment and advancement disadvantaged individuals,
Support For minority owned business.

Human Promotion of employee health and safety. Employee training

Resources and development. Remedial education programs for
disadvantaged Employee Career Counseling

Community Donations of cash, products, services or employee time.

Involvement Sponsorship of public health projects. Support of education
and the arts. Support of Community recreations programs.
Co-operation in community projects

Products Enhancement of product safety. Sponsorship of product

safety education programs. Reduction of polluting potential
of products. Improvement in nutritional value of product.
Improvement in packaging and labeling

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Following factors encouraging companies to be socially

responsible:

1. Changing consumer and employee expectations

2. Enhancing corporate reputation

3. Increasing legislation

4. Motivate Loyalty in staff

5. Increasing influence of NGO’s

6. The knock on effect of corporate accounting scandals such as Enron

and World Com

7. A pervasive media in search of stories

8. Happy restful sleep and hassle free life for the people working in
the business

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NECESSITY OF CSR IN BANKS

 Banks are financial institution were customer money and finds are being
managed by banks with a assurance of enhanced benefits
Quality service and security, if customers are to retain their faith in the
bank the banks should provide them with quality service. This is a most
important major social obligation toward customers.

 Failure to provide quality service is nothing but breach of basic social

and legal responsibilities as rightly said by Mahatma Gandhi

 “A customer is the most important visitor on our premises.

We are dependent on him. He is not an interruption in our work. He is
the purpose of it. He is not an outsider in our business. He is part of it.
We are not doing him a favor by serving him. He is doing us a favor by
giving us an opportunity to do so.”

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OBJECTIVE OF RESEARCH

 To find out the potential for implementing a customer friendly

practices in banks.

 To identify the areas where IT can help to improve the service

quality and work culture.

 To identify what are the ways and means to install IT based

services to enhance CRM practices.

 To assess an overall impact of IT on development of a customer

friendly culture.

HYPOTHESIS

 Fulfilling CRM obligation and enhancing customer satisfaction is

the social responsibility of the banks.

 IT plays an important role in development of healthy CRM

practices.

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POTENTIALS FOR IMPLEMENTING CUSTOMER

FRIENDLY PRACTICES

 To offer right advice regarding customers requirement regarding

various banking services.

 Fulfillment of KYC norms to inform, awaken and develop a sense

of being right citizens among customers.

 To inform the customers as to what are their duties as a disciplined

bank customer.

 To publish the customer charter of rights and duties and awake

them as to how they can avail the bank services in the efficient
manner.

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IT IS AN INSTRUMENT OF SYSTEM CHANGE

 Development of information kiosk to provide right and timely

information.

 Promotion of customer friendly and web enabled services.

 Development of a paperless work system.

 Touch screen single windows to settle doubts and queries of

customers.

 Offering a web based dispute settlement mechanism.

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WAYS AND MEANS TO INSTALL IT BASED SERVICES

TO ENHANCE CRM BASED PRACTICES

The areas where web enabled and IT based services can be provided to
the customer,

 Mobile banking for prompt connectivity, information and

deliverance.
 Rapid expansion of ATM network in the rural area.
 Providing financial literacy program through computer and web
based services.
 Providing market intelligence and market information to specific
segment in relation to banking and financial sectors.
 Development of depositors, interest protection program.
 Dissemination of banking and financial information.
 Grievance redressed system.
 Deposit insurance and deposit safety
 Development of credit and loan information systemDesigning
customized product and services.

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JUSTIFICATION OF HYPOTHESIS

 In the present discussion the researcher has provided with

a variety of area where customer service and customer care
happens to be a most important aspect of bankers business.

 Survival is the key responsibility of every business as

Every business is a social custodian of economic resources
therefore the true and primary social responsibility of bank
lies toward customer which justifies the presumption of the
current paper.

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CSR IN HDFC BANK LTD

1. Housing Development Finance Corporation Limited (HDFC)

2. HDFC bank was incorporated in August 1994 & currently

Has a nationwide network of 4014 Branches & 11,766 ATM.
3. HDFC was ranked 32nd among India's most trusted brands.

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2. PREAMBLE

CSR covers the entire process by which an organization approaches,

defines and develops its relationships with stakeholders for the common
good, and demonstrates its commitment in this regard by adoption of
appropriate strategies and projects. Thus CSR is not charity or mere
donations but a way of going beyond business as usual, creating shared
value and contributing to social and environmental good.

3. PURPOSE

HDFC Bank is committed to identifying and supporting

Programs aimed at:

 Developing and advancing the community and in particular, those

at the bottom of the pyramid who are unequally endowed/enabled,
and also

 Reducing negative impact of its operations on the environment

This policy will serve as a guiding document to help identify, execute

and monitor CSR projects in keeping with the spirit of the policy.
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The CSR policy would function as a self-regulating mechanism for the

Bank’s CSR activities and enable adherence to laws, ethical standards,
and international practices in this regard.

4. POLICY STATEMENT / VISION

The Bank’s CSR mission is to contribute to the social and economic

development of the community.
Through a series of interventions the bank seeks to mainstream
economically, physically and socially challenged groups and to draw
them into the cycle of growth, development and empowerment. At the
core of this is its commitment to reach out to marginalized communities
through its Sustainable Livelihood Initiatives.

The Bank’s strategy is to integrate its activities in community

development, social responsibility and environmental responsibility and
encourage each business unit or function to include these considerations
into its operations.

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5. SCOPE
This policy will apply to all projects/programs undertaken as part of the
Bank’s Corporate Social Responsibility activities and will be developed,
reviewed and updated by reference to relevant codes of corporate
governance and international standards or best practices. This policy is
also in line with the
CSR Rules (Sec.135 of Companies Act, 2013).

6. GOVERNANCE

Overall governance of CSR and approving of the CSR Policy will be the
responsibility of the CSR Committee of the Board. The CSR Department
of the Bank will be responsible for administering and executing the
policy. As the Bank’s CSR activities evolve further, the policy may be
revised with the approval of the CSR Committee of the Board.

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7. CSR COMMITTEE

The Bank will institute least three times in a year. The following shall be
the terms of reference of the Committee. A CSR Committee of the
Board consisting of three or more directors including at least one
Independent Director. The Committee will meet at

 To formulate the Bank’s CSR strategy, policy and goals

 To monitor the Bank’s CSR policy and performance
 To review the CSR projects/initiatives from time to time
 To ensure legal and regulatory compliance from a CSR
Viewpoint
 To ensure reporting and communication to stakeholders on
The Bank’s CSR projects/initiatives

Consistent with the above, the CSR Committee of the Board currently
has the following members:

1. Mr. Bobby Parikh (Independent Director)

2. Mr. Perth Data (Independent Director)
3. Mrs. Reno Kerned

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8. CSR BUDGET
The overall amount to be committed to CSR will be approved by the
Board as part of the Bank’s overall Annual Budget/Plan. Within the
budgeted amount, specific CSR Initiatives / projects will be approved in
line with the process approved by the CSR Committee of the Board. All
projects undertaken by the Bank will be approved / ratified by the Banks
CSR Committee.

9. SUPERVISION
The Bank’s CSR activities will be driven by a dedicated CSR team
under the guidance and support of senior functionaries, in particular, the
DMD/MD. The CSR Committee and CSR Department would play a
significant role in ensuring that the CSR policy is embedded across the
Bank’s operations and the CSR initiatives are in line with the policy.

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10. IMPLEMENTATION

The Bank will undertake CSR projects which are closely linked with the
principles of sustainable development and shared value, with the
involvement of local institutions and the community at large.

The CSR Department would assist in implementation and monitoring of

the CSR projects/initiatives. The actual implementation of various
initiatives will be broad-based with the involvement of various Banks
employees/units or through implementing agencies like NGOs, Trusts,
Societies, Section 8/ Section 25 companies, DST certified incubation
centers or through collaborative projects with other corporate. In case of
the implementing agency being a ‘not for profit’ organization, the entity
should typically have not less than three years of experience in
implementing projects in the respective area. The implementation
partner will also be screened based on the Bank’s internal screening
criteria to ascertain the entity’s credibility and its ability to execute the
proposed projects.

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11. DISBURSEMENT
The disbursal of funds will be either in trenched drawdown form or one-
time payment depending on the nature and requirement of the project.
The terms, conditions and timing of disbursement will be discussed and
agreed to with the CSR Department and project teams, and will typically
form part of the Memorandum of Understanding with the entity
implementing the project.

12. MONITORING

The CSR Committee will ensure a transparent monitoring mechanism

for ensuring effective implementation of the projects / programs/
activities proposed to be undertaken by the Bank.

The CSR Department would have the responsibility of monitoring

approved projects and funds disbursals for such projects. Monitoring
mechanisms will include visits, meetings and progress/status reporting
by the project teams. The Bank’s CSR activities will be reviewed by the
CSR Committee. A system will be put in place to maintain a transparent
monitoring and reporting mechanism across all the stakeholders
involved in the CSR activities of the Bank, as desired by the CSR Rules
(Section 135, Companies Act, 2013)

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13. CSR PROGRAMS / PROJECTS

The Bank is highly supportive of the involvement of its employees in its

CSR initiatives and in community activities/charities of their choice, and
will therefore proactively engage with employees and other key
Stakeholders to solicit their active involvement in the Bank’s CSR
programs.

To provide a focused and structured approach to the program, the Bank

will focus its support and CSR spends on specific pre-determined causes
and areas of intervention as outlined in the Annexure to the policy. The
CSR Department would put up to the Committee appropriate details of
proposed projects including implementation year, modalities of
execution in the areas/sectors chosen, implementation schedules for the
same etc. The CSR Committee will consider and approve (in line with
the guidelines given below), CSR projects/programs to be undertaken
during the year.

a) The Bank will ensure that its CSR projects are none
Discriminatory in nature and do not have any restrictive
Political or religious affiliations.

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b) The programs/ projects will be within the areas recommended

/ listed by the CSR Committee and mentioned in the Policy.

c) The programs/ projects will be beyond business as usual.

d) The programs/projects will be implemented within the

Country and preferably in areas where the Bank has its
Presence.

e) The Bank will actively consider Programs/Projects that have

Also those where employees are directly involved through
Volunteering efforts.

f) Programs/Projects that integrate business models with social

And environmental priorities and processes in order to create
Shared value will be encouraged.

g) The Bank will consider Programs/Projects closely linked with

The principles of sustainable development.
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h) Programs/Projects should not be exclusively for the benefit of

Employees of the company or their family members or those
That are conducted /undertaken exclusively in pursuance of
The normal course of business.

I) any surplus, generated out of the CSR activities of the Bank,

Will be ploughed back to the CSR Initiatives of the Bank.

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14. REPORTING

Our Origins

The housing development finance corporation limited (HDFC), founded

in 1977, and is Indian’s largest mortgage company. It was amongst the
first companies to receive an ‘In-Principle’ approval from the reserve
bank of India (RBI) to set up a private sector bank, thus leading to the
establishment of HDFC bank limited in august 1994. Headquartered in
Mumbai, we began operations as a scheduled commercial bank in
January 1995 & have today become India’s second largest private bank
by balance sheet.

OUR JOURNEY

HDFC bank incorporated Times bank limited Amalgamation of

As a scheduled merged with HDFC bank Centurion bank of

Commercial bank Punjab with

HDFC bank

1995 2000 2008

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At HDFC bank, our mission is to be “a World class Indian Bank” in

terms of product offerings, technology, service levels, risk management
and compliance. We are committed to contribute towards inclusive
growth, reaching out to the bottom-of-the pyramid segments by offering
development & financial support.

Our objective is to build sound customer franchises across distinct

businesses, to be the preferred provider of banking services for
customers, and to achieve healthy growth in Profitability, consistent with
our risk appetite. Coupled with efforts towards social responsibility and
environmental preservation, we are driven by the highest levels of
ethical standards, professional integrity, and corporate governance and
regulatory compliance.

Since inception, our business philosophy has been guided by the core
values of people, customer focus, operational Excellence and product
leadership and these core values fuelled our growth over the years. In
FY 2013-14, we adopted and established Sustainability as the fifth core
value that defines our business.

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OUR CORE VALUES

CUSTOMER PRODUCT
FOCUS
PEOPLE LEADERSHIP

OPERATIONAL EXCELLENCE SUSTAINABILITY

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Our Products and Services

We cater to a wide range of banking services covering commercial and

investment banking on the wholesale side and transactional/branch
banking on the retail side. We serve customers through three key
business segments which comprise mainly of:

Wholesale Banking

With superior product delivery, service levels and strong

customer orientation, we have made significant inroads into the
banking consortia of a number of leading Indian corporate
including multinationals, companies from the domestic business
houses and prime public sector companies and are recognized as
a leading provider of cash management and transactional
banking solutions to corporate customers, mutual funds, stock
exchange members and banks.

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Commercial Working Capital, Term Loans, Bill / Invoice

Banking discounting, Forex & Derivatives, Wholesale,
Deposits, Letters of Credit, Guarantees

Transactional Banking Cash Management, Custodial Services,

Clearing Bank Services, Correspondent
Banking, Tax Collections, Banker to Public
Issues

Investment Banking Debt Capital Markets, Equity Capital Markets,

Project Finance, M&A and Advisory

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Retail Banking

Our Retail Banking business provides customers with a full range of

financial products and banking services, giving them a one-stop window
for all their banking requirements. The products are backed by world
class service and delivered to customers through our growing branch
network, as well as through alternative delivery channels like ATMs,
Phone Banking, Net Banking and Mobile Banking.

Loan Products Auto Loans, Personal, Loans Home Loans, Vehicle Finance,
Agriculture and Tractor Loans, Credit cards, Loans against
Gold/Securities, Construction Equipment Finance,
Education Loans, SHG Loans, Kisan Gold Card

Deposit Savings Accounts, Current Accounts, Fixed/Recurring

Products Deposits, Corporate Salary Accounts

Other Services Depository Accounts, Mutual Fund Sales, Private

Banking, Insurance Sales (Life, General), NRI Services,
Bill Payment Services, POS Terminals, Debit Cards

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Treasury

With the liberalization of the financial markets in India, corporate need

more sophisticated risk management information, advice and product
structures. Along with such services, fine pricing on various treasury
products is provided through our Treasury business.

Foreign Exchange Debt Securities

Equities Derivatives

Asset Liability Statutory Reserve

Management Management

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Our Approach - Healthy Growth and Low Risk

Growing economy/ Nationwide network,

banking industry, expanding semi urban and
gaining market share rural footprint

Strong risk Wide product range

management, Focus and multiple customer
on asset quantity segments

Leveraging organic and Inorganic

growth opportunities

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HIGHLIGHTS

 Net Profit :
Rupees 10,216 crore. An increase of 20.5% compared to the previous year.

 Balance sheet size :

Rupees 590,503 crore. An increase of 20.1% compared to the previous year.

 Total Deposits :
Rupees 450,796 crore. An increase of 22.7% compared to the previous year.

 Total Advances :
Rupees 365,495 crore. An increase of 20.6% compared to the previous year.

 Capital Adequacy Ratio :

16.8%

 Tier I capital Ratio :

13.7%
 Gross Non- Performing Assets :
0.93% of Gross Advances
 Network :
Branches: 4,014
ATMs: 11,766
Cities/Towns: 2,464

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OUR REACH

14000

12000 11766

11256

10000
10473

8000 8913
11-12 Year
12-13 Year
13-14 Year
6000 14-15 Year

4014
4000

3403
3062
2000
2171 2464
1845

2544
1399
0
Branches ATMs cities/towns

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PRADHAN MANTRI JAN- DHAN YOJANA

HDFC bank has been fulfilling the financial inclusion mandate of the
Pradhan Mantri Jan-Dhan Yojana (PMJDY). It is among top private
sector banks both in terms of account value and the number of accounts
opened under the scheme.

PMJDY was launched on August 28, 2014 by the honorable Prime

Minister to bring about total financial inclusion. The scheme relies
heavily on technology to provide every unbanked house hold access to
various banking services such as savings accounts within a set
timeframe.

Under the scheme, the bank was allocated 1499, urban wards & 453 sub-
services areas (SSA) in 27 states, including 2 union territories. In the
initial step, the bank completed a house-to-house survey covering all
regions end of last year, well within the prescribed deadline of
December 26 set by the department of financial services (DFS). In a

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landmark event, it completed account opening for 100% unbanked

households by January 26, 2015, within the schemes stipulated deadline.

The bank relies on its technological edge to fulfill the schemes

objectives. In a first, it has deployed Micro ATMs, allowing both
Aadhaar & Rupay PIN based transactions on the same machine. Each
correspondent point allows direct opening of accounts through Micro
ATMs compliant with UIDAL specifications. The E-KYC facility is also
provided at these points.

Underscoring the bank’s achievements under PMJDY, the government

of Madhya Pradesh in December 2014 recognized it as the ‘Best
Performing bank’ for overall performance. In October 2014, the
Ministry of finance honoured the Yamunanagar branch as the ‘Best
Branch’ for total deposits mobilized under PMJDY.

The importance of financial inclusion on a countrywide scale cannot be

overemphasized. The bank is well placed to meet the scheme’s
objectives through its prime technologies and a nation-wide network.
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Following are the diagrams shows

PROFIT AFTER TAX (rupees in crore)

12000

10000 2006
2007

8000 2008
2009
10216
6000 2010
8478 2011
4000 2012
6726 2013
2000 2014
5167
1590 2245 2949 3926 2015
871 1141
0
1

DIVIDEND PER SHARE (Rupees)

9
8.0
8
6.9 2006
7 2007
6 5.5 2008
5 2009
4.3 2010
4 3.3
2011
3 2.4 2012
1.7 2.0 2013
2 1.4
1.1 2014
1
2015
0
1
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EARNING PER SHARE (Rupees)

45

40
2006
35
2007
30 2008
2009
25 42.1
2010
20 35.5 2011
28.5
2012
15
22.1 2013
10 13.5 2014
17.0
9.2 10.6
5 7.3 2015
5.6
0
1

Previous year figures have been changed to reflect split of share into FV
of Rupees 2 per share

Proposed dividend

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BALANCE SHEET SIZE (Rupees in crore)

700,000
590,503
600,000
491,600
500,000
400,332
400,000 2013

300,000 2014
2015
200,000

100,000

0
1

DEPOSITS (Rupees in Crore)

500,000 450,796
450,000
367,337
400,000
350,000 296,247
300,000 2013
250,000
2014
200,000
150,000 2015
100,000
50,000
0
1

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RETAIL ASSETS (Rupees in crore)

250,000

193,035
200,000
164,763
150,000
136,388
2013
2014
100,000
2015

50,000

0
1

ADVANCES (Rupees in Crore)

400,000
350,000 365,495
300,000
2013
250,000
2014
200,000 303,000 2015
150,000 2015
239,721 2014
100,000
50,000
2013
0

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SAVING DEPOSITS (Rupees in crore)

140,000 124,927
120,000 103,133
88,211
100,000
80,000
Datenr…
60,000
40,000
20,000
0
2013
2014
2015

NET INTEREST MARGIN (%)

4.50%
4.48%
4.46%
4.5%
4.44% 2013
4.42% 4.4% 2014
4.40% 2015
4.4%
4.38%
4.36% 2015
4.34% 2014
2013

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RETURN ON CAPITAL (%)

25

20
20.4% 2013
15 2015 2014
10 20.1% 2015
20.9% 2014
5

0 2013

CAPITAL ADEQUACY (%)

16.8%

16.8%
16.80%
2013
16.60% 16.1%
2014
16.40%
2015 2015
16.20%
16.00% 2014
15.80%
2013
15.60%
1

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DEBIT CARDS (Nos. in lac)

250

200 201 3
216.3 2014
150
2015
174.2
100
2015
157.6
50 2014
201 3
0

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CREDIT CARDS (Nos. in lac)

59.7
70 51.4
64.2
60

50

40 2013
2014
30
2015
20
10 2015

0 2014

2013

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RUPEE EARNED

Sales

interest from advances

3.2%
11.5%
interest from investment
19.6%
commission, Exchange
64.7% Brokerage

FX & Derivative income

others

RUPEE SPENT

Sales

4.5%
7.2%
9.6%
interest expense
48.7%
opearting expense
26.1% tax
transfer to reserve
dividend & tax on dvidend

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SUMMARY FINANCIAL PERFORMANCE

For the year ended

March 31,2015 March 31,2014

Deposits and other Borrowings 496,009 406,776.5
Advances 365,495.0 303003.3
Total income 57,466.3 49,055.2
Profit before depreciation and Tax 15,985.0 13,443.7
Net profit 10,215.9 8,478.4
Profit brought forward 14,654.2 11,132.2
Total profit available for Appropriation 24,870.1 19,610.6

Appropriations:
Transfer to statutory Reserve 2554.0 2119.6
Transfer to General Reserve 1021.6 847.8
Transfer to capital Reserve 224.9 58.3
Transfer to Investment Reserve 27.5 3.2
Proposed Dividend 2005.2 1643.4
Tax including Surcharge and Education 408.2 279.3
cess on Dividend
Dividend (including tax/cess thereon) 0.8 4.8
pertaining to previous year paid during the
year
Balance carried over to Balance sheet 18,627.9 14,654.2

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CONCLUSION OF THE STUDY

The above areas are related with the protection of customer interest.
There are various issues where bank as a service provider must come
forward and provide suitable guidance and information to protect
investors and depositors interest.

If a bank offers a right kind of services to the potential and existing

customer that it definitely leads to higher customer satisfaction. Unless

Until banks work for customer development and customer care,

expansion of business is usually not possible.

One should always keep in mind that it takes month to acquire a

customer but minutes to lose it. Therefore the primary social
responsibility of banks in order to retain their existing business and
expand their future business.

Therefore the corporate social responsibility is towards customer.

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BIBLOGRAPHY

 WWW.GOOGLE.COM
 MODERN BANKING IN INDIA (RELATED TO CSR IN
BANKING BOOK)

45

CSR IN BANKING
 VIVEK COLLEGE OF COMMERCE

46

CSR IN BANKING