IJRMEC_423_97966

International Journal of Research in Management, Economics & Commerce
(Impact Factor: 4.604, ISSN 2250-057X, Volume 5 Issue 3, March 2015)

Website: www.indusedu.org
COMPARATIVE ANALYSIS ON CORPORATE SOCIAL

RESPONSIBILITY IN PUBLIC AND PRIVATE SECTOR BANKS OF
INDIA
Dr. Inder Pal Singh
Associate Professor, Head, Media and Public Relations, KCL Group of Institution, Jal
Tej Inder Deep Singh
Research Scholar, P.T.U
ABSTRACT
The purpose of this study is to analyze the corporate social responsibility (CSR) activities
carried out by public and private sector banks in India. The analysis show the work of CSR is
done by the Indian banking industry is a good initiative but there is a still room for development
in this area. Some banks are lagging in the regulatory norms of CSR. It seems that banks are
giving more emphasis on the social issues and financial issues to fulfill their social responsibility
but environmental issues are touched little. The public sector banks has overall higher spending
than the private sector banks. The study is done with the secondary data which is taken from the
annual reports of banks and other sources. Variables used in the study are: rural branch
expansion, priority sector lending, environment protection, community welfare, women welfare,
new initiative related to CSR, education and farmers’ welfare.
Keywords: charity, corporate analysis, corporate social responsibility, Public sector banks,
public welfare.
E-mail id:- editorindus@gmail.com Page 128

INTRODUCTION:
The United Nations Industrial Development Organization (UNIDO) has defined corporate social
responsibility (CSR) as “a management concept whereby companies integrate social and
environmental concerns in their business operations and interactions with their stakeholders.
CSR is a way in which companies achieve a balance of economic, environmental and social
imperatives.”
Corporate Social Responsibility is emerging as a important feature of business philosophy, it
shows the impact of business on society in the context of sustainable development of the society
and public. CSR not only includes corporate regulatory norms, but also to take the initiative of
making business successful through balanced, voluntary approaches to environmental and social
issues in such a which helps the development of better environment for society. In the modern
era economic growth and development in India depends upon the strong financial system which
includes the banking sector, financial institution and markets. Financial markets and financial
institutions play a crucial role in the financial system by providing various financial services for
economic development of Indian community.
In order to streamline the philanthropic activities and ensure more accountability and
transparency, the government of India made it mandatory for companies to undertake CSR
activities under the Companies Act, 2013. The concept of CSR is defined in clause 135 of the
Act, and it is applicable to companies which have an annual turnover of Rs. 1,000 crore or more,
or a net worth of Rs. 500 crore or more, or a net profit of Rs. 5 crore or more.
Under this clause, these companies are supposed to set aside at least 2% of their average profit in
the last three years for CSR activities. The law has listed out a wide spectrum of activities under
CSR, which cover activities such as promotion of education, gender equity and women‟s
empowerment, combating diseases, eradication of extreme poverty, contribution to the Prime
Minister‟s National Relief Fund and other central funds, social business projects etc. The
companies can carry out these activities by collaborating either with a NGO, or through their
own trusts and foundations or by pooling their resources with another company. The law also
entails setting up of a CSR committee which shall be responsible for decisions on CSR
expenditure and type of activities to be undertaken.

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 made it
compulsory to submit a report on CSR activities at the end of every year.
The purpose of this paper is to do analysis CSR of the some public and private sector banks of
India on the basis of their income. Content analysis is done by studying annual reports from the
concerned bank‟s website.
LITERATURE REVIEW:
This section provides a review of the theoretical literature on CSR activities in banking sector in
India. Banks act as financial intermediaries in our society; they price and value financial assets,
they monitor borrowers, they manage financial risks and they organize the payment system
(Greenbaum and Thakor, 2007). 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”. 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 thinking about the CSR. Frederick
(1960) mentioned „Social responsibility means that businessmen should oversee the operation of
an economic system that fulfils the expectations of the people.
Economy‟s means of production should be employed in such a way that production and
distribution should enhance total socio-economic welfare. Abbott and Monsen (1979) developed
a corporate social involvement disclosure scale, based on the analysis of annual reports of the
Fortune 500 companies. They have used six areas under analysis as: environment, products,
equal opportunities, personnel, community involvement, and other disclosures.
Zappi (2007) used three attributes employees, customers and environment, for measuring the
CSR in Italian banks. Sharma (2011) has given a list of core thrust areas for reporting CSR
activities by the Indian banks as: children welfare, community welfare, education, environment,

healthcare, poverty eradication, rural development, vocational training, women's empowerment,
and protection to girl child, employment.
Aupperle (1985) reported a positive association between the corporate social responsibility and
the profitability of the companies. Allouche and Laroche (2005), Wu (2006) performed various
analyses and found an overall positive effect between CSR and financial performance.
McDonald and Thiele (2008) in their study on the relationship between CSR and customer
outcomes found that the CSR strategies and customer satisfaction have a positive relationship.
From the above literature it is clear that the banks are playing significant role in CSR activities.
The CSR activities plays important role in the financial activities of banks. In India the banks are
giving financial support for the development of Indian economy. The purpose of this study is to
explore the CSR activities of banks.
RESEARCH METHODOLOGY:
This research is based on the secondary data collected from the annual reports of banks. Sample
of 4 banks are collected for study. As banks were selected on the basis of total income generated;
Priority sector lending and rural branch expansion. It is apparent that banks with high income
margin contribute which are SBI, HDFC, PNB and ICICI. From the literature review following
variables have been identified for assessment of CSR of the banks (Shown in Table 1).
Table.1: Variables for CSR
CSR activities done by banks
1.Community welfare and development

2. Skill development and training
3. Environment
4. Financial inclusion
5. Women empowerment
6. Healthcare
7. Education
8. Support to disabled
9. Development of culture and sports
Others
Other activities: charity, contribution to CM funds etc.

CSR funding data:
Following is the CSR amount which is contributed by the top public sector and private sector
banks:
Table.2: State Bank of India
Type of Bank CSR Amount in CSR Amount in CSR Activities
Rs.(Cr,) Rs.(Cr,)
FY 2012-2013 FY2013-2014
Public Sector 123.27 148.93 1. Supporting Education
2. Healthcare
3. Assistance to underprivileged
4. Research and Development
5. Environment Protection
6. Assistance during natural
calamities
7. National Donations
8. Skill development
SBI is the largest bank of India in public sector. Its distribution of funds is increased from 123.27
crore to 148.93 crore (both in Rupees) but it can be improved. CSR has always been a part of the
State Bank of India covering various social, environmental and welfare activities. During the
financial year 2013-14, bank opened 1,053 branches, 57% of which were in rural and semi-urban
areas taking the total number of branches of the Bank to 15,869.
Table. 3: HDFC Bank
Rs.(Cr,) Rs. (Cr,)
FY 2012-2013 FY2013-2014
Private Sector 39.01 141.01 1. Supporting Education
2. Environment Protection
3. Community welfare
4. Training for sustainable
livelihood
5. Financial Inclusion

HDFC bank expanded its distribution network from 3,062 branches in 1,845 cities / towns as on
March 31, 2013 to 3,403 branches in 2,171 cities / towns as on March 31, 2014. Number of
ATMs increased from 10,743 to 11,256 during the same period. In previous years its
contribution to CSR activities is just Rs. 39.01 crore but it improved well by contributing Rs.
141.01 crore. The Bank's focus on semi-urban and under-banked markets continued, with over
80% of the HDFC bank's new branches in semi-urban and rural areas. It believes inclusive
growth and development of society.
Table. 4: Punjab National Bank
Rs. (Cr,) Rs. (Cr,)
FY 2012-2013 FY2013-2014
Public Sector 324.43 293.75 1. Assistance during natural
calamities
2. Healthcare
3. Training and development
activities for farmers
4. Distribution of Artificial Limbs
5. Blood Donation Camps
6. Tree Plantation
PNB has branch network of the bank as on 31.03.2014 is 6201. These include 5636 General
Banking Branches, 241 Specialized Branches. Its‟ contribution to CSR activities are averagely
good. There are five PNB sponsored RRBs, which are operating in five States, namely, Bihar,
Haryana, Himachal Pradesh, Punjab and Uttar Pradesh, together covering 74 districts with a
network of 1927 branches. During FY''14, 187 new branches have been opened by RRBs. CSR is
an integral part of Bank corporate strategy. Giving back to the society is the motive behind these
activities for future generation.
Table. 5: ICICI Bank

Rs. (Cr,) Rs. (Cr,)
FY 2012-2013 FY2013-2014
Private Sector 116.55 164 1. Supporting Education
2. Healthcare
3. Skill development &
sustainable livelihood
4. Financial Inclusion
ICICI 3,350 branches and over 10,900 ATMs spread across the country. Its contribution toward
CSR activities is not according to its financial performance. The Bank services its large customer
base through a multi-channel delivery network of branches, ATMs, call center and internet
banking. The Bank has nearly 800 rural branches, including 436 in the hitherto unbanked areas.
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.
RURAL BRANCH EXPANSION:
It is used to measure the extent up to which the banks are following the financial inclusion policy
formulated by the RBI to promote balanced growth of the economy. According to Vijay Mahajan
(2008) private ownership, good governance, professional management, no caps on interest rates,
and most importantly, commitment to local areas and local community are a few factors that
could lead to financial inclusion that public banks are having highest number of rural branches in
all the three years. SBI is the top performer among rural branch expansion variable. Now in these
days private and public sector banks are focusing more on expansion in rural sector. Thus overall
it can be interpret from the table that public banks are leading in rural branch expansion then
private sector banks.
Table. 6: Rural Branch Expansion of banks
(2009-10, 2010-11, 2011-12)
Type Bank 2009-10 2010-11 2011-12
Public SBI 4697 4972 5250
Private HDFC 95 123 177
Public PNB 1949 1972 2176
Private ICICI 144 260 285

Priority sector lending:
Priority Sector lending means lending to the agriculture, small scale and ancillary industries, new
and renewable sources of energy, cottage industries, artisans, food and agro based processing,
education, housing and weaker section. Both the public and private sectors are required to lend
40 per cent of their net bank credit (NBC) to the priority sector. Priority sector lending ratio was
35.70 (Maximum) and 26.99 (Minimum) in the year 2009-10 for banks under research. In the
case of private sector banks like ICICI and HDFC is decreasing continuously which may be due
to missing the PSL targets. This is particularly in case of banks failing to meet their sub-targets
for agricultural advances. One of the reasons banks face lending to this sector is that recovery is
often difficult. Following is the table of PSL.
Table. 7: Priority Sector Lending ratio
(2009-10, 2010-11, 2011-12)
Type Bank 2009-10 2010-11 2011-12
Public SBI 26.99 30.61 28.82

Private HDFC 35.09 34.24 32.68
Public PNB 35.70 32.48 31.33
Private ICICI 29.79 24.68 23.37
Community welfare:
The CSR activities performed by the banks for the general welfare of the community. Some of
the common activities in this field are campaigns against usage of drugs, alcohol and smoking,
helping disabled persons by donating artificial limbs/calipers/wheelchairs, community welfare
through helping NGOs, Blood donation camps, donations for disaster relief and accident victims,
health awareness program, free food distribution to the poor patients of government health care
centers etc. Both the public and private sector banks contributed highest amounts in this CSR
activity.
Environment protection:
All the activities carried out by the banks for the purpose of environment protection or to reduce
the environmental harm by adopting different initiatives. The World Bank has also pressurised
the banks not to finance the projects, which are causing harm to the environment either directly

or indirectly. Environment protection includes no credit to businesses involved in Ozone
depletion, human rights violation, reduced use of paper in offices, promoting and financing
energy saving and solar energy projects, encouraging, financing and setting up of non-
conventional energy generation units, Wild animal protection projects, projects related to
reduction of carbon emissions. In this area both the public and private sector banks are lagging.
There are very few projects adopted by private sector banks for environment protection against
public sector banks. Environment protection should be in priority.
Women Welfare:
Activities which banks are performing in the field of the women welfare are women
empowerment through donation of sewing machines for self employment, support to Indian
School of Microfinance for Women, Insurance policies especially for rural and urban poor
women, free or concessional education for poor girls, scholarships to girl students etc.
Financial Inclusion:
Financial literacy has assumed greater importance in the recent years, as financial markets have
become increasingly complex. Financial literacy is providing familiarity with and understanding
of financial market products, especially rewards and risks, in order to make informed choices. In
India, the need for financial literacy is greater due to the low levels of literacy and the large
section of the Indian population still remains out of the modern financial system. RBI has
initiated a scheme for setting up of Financial Literacy and Credit Counseling (FLCC) Centers by
the banks. The private sector banks are ahead in this CSR activity, they are promoting modern
system.
CONCLUSION:
Banks are playing important role in the corporate social responsibility for the development of
India. Indian banks are making good efforts in the CSR but still there are some sectors in which
they need more focus.
According to guidelines of RBI companies are required to give at least 2 percent profits of the
average three years, in which public sector banks are doing better than private sector banks.
1. Public sector banks like SBI and PNB are giving more contribution rather than HDFC and
ICICI.

2. Even after the RBI guidelines of financial literacy the banks are not taking required steps.
In this area private sector banks like HDFC and ICICI are providing better service to
consumer rather than public sector SBI and PNB banks.
3. Financial institutions are judged from their profitability but like SBI, HDFC, PNB and
ICICI are on the top list but not on the top of CSR activities.
4. The environment factor is not taken seriously by the banks, its maybe due to they are not
related directly in use of natural resources. All banks should give equal importance to
environment also.
5. Private sector banks like ICICI and HDFC need to open more rural branches. Public sector
banks are opening more branches in rural areas than private sector branches.
This study can be valuable for making further CSR activities by both the public sector and
private sector banks. The sample of the study is limited to only SBI, HDFC, PNB & ICICI.
There can be limitation to the study the study has scope of research on the CSR in banks.
REFERENCES:
1. Abbott, W. F. and Monson, J. R. (1979), “On the measurement of corporate social: self
reported disclosure as a method of measuring corporate social involvement”, Academy of
Management Journal, 22, 501-515.
2. Allouche, J. and Laroche, P. (2005), “A meta-analytical examination of the link between
3. corporate social and financial performance”, French Review of Human Resource
Management. 57, 18-41.
4. Bowen, H.R., (1953),”Social responsibilities of businessman”, New York: Harper &
Row.
5. Frederick, W.C., (1960), “The growing concern over business responsibility”, California
Management Review. 2, 54-61.
6. Gupta, R. and Agrawal, G. (2014), Corporate Social Responsibility: A Check on Indian
Banks for Responsible Investment/Major activities reported by banks retrieved on Feb 27
2015 from www.aims-international.org/aims12/12a-cd/K467-final.pdf
7. McDonald, L. M. and Rundle-Thiele, S. (2008), “Corporate social responsibility and
bank customer satisfaction”, International Journal of Bank Marketing. 26 (3), 170-182.

8. Sharma, E. Mani, M. (2013), Corporate social responsibility: an analysis of Indian
commercial banks/ Priority Sector Lending ratio and Rural Branches of banks (2009-10
to 2011-12). AIMA Journal of Management & Research, February 2013, Volume 7, Issue 1/4, ISSN 0974
– 497
9. Sharma, Nishi. (2011), “CSR practices and CSR reporting in Indian banking sector”,
10. International Journal of Advanced Economic and Business Management. 1(2),58-66.
11. Wilson, B., (2002), “Oil industry adapting to evolving new paradigm on corporate
governance accountability”, Oil and Gas Journal. 28, 20-32.
12. Wu, M. L. (2006), “Corporate Social Performance, Corporate Financial Performance, and
Firm Size: A Meta-Analysis”, Journal of American Academy of Business. 8 (1), 163–171.
13. Zappi, Gianna (2007), “Corporate responsibility in the Italian banking industry: creating
value through listening to stakeholders”, Corporate Governance. 7 (4), 471-475.
14. Annual reports of all concerned banks (FY 2011-12, 2012-13, 2013-14) for tables: 2-5
15. Web sites consulted:
16. www.karmayog.org/csr accessed on 19th march 2015.
17. www.rbi.org.in
18. websites of all the banks under study.

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International Journal of Research in Management, Economics & Commerce

(Impact Factor: 4.604, ISSN 2250-057X, Volume 5 Issue 3, March 2015)

COMPARATIVE ANALYSIS ON CORPORATE SOCIAL

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1.Community welfare and development

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Table. 5: ICICI Bank

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Public SBI 26.99 30.61 28.82

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