The development process of CSR strategy in Indian |Banking Sector can be divided into 4 phases. During 1920’s the CSR activities in financial sectors are mainly motivated by charity and philanthropy which does not have a clear planning or message towards society. Between 1914 and 1960 the financial sectors become more concerned over ethical responsibilities and social development to become a good corporate citizen.
During early stage of 1970’s the financial sectors become more concern over the legal responsibilities by following rules and regulations while carrying out business activities.
After 1980 the Indian financial organisations combine CSR into a understandable and sustainable business Strategy. Analysis of CSR Activities of Indian banking companies At present banking sectors are under immense pressure from investors, share holders, NGO’s to perform the business in more on ethical and responsible way(Bhattacharya 2004).
But in Indian Banking sectors CSR activities are considered to be on the lower side while comparing other countries and the government has not adopted any rules and regulations for carry out CSR.
The Reserve Bank of India who controls all banks of India sense that the CSR activities in both public sector and private sector banking are lacking while compare to other countries. In order to improve the CSR activities in Banking Sectors the RBI issued a notification on 2007, advising all banks to improve the CSR activities by helping the cause of sustainable development with full cooperation from boards.
The RBI also advised all banks to combine the environmental and social concerns in their business activities which will have a positive effect on stake holders and society Even though lot of Indian banks are still not considered CSR seriously, Some Public and private banks like SBI, SIDBI, Punjab National Bank, ICICI Bank, HDFC Bank, Union Banks, etc. are doing some good initiative as a part of CSR . While carrying out CSR activities the key areas Indian banking sectors considered are environment and community. Some of the recent CSR initiatives provided by different banks in India are listed below.
Environment To make an appeal in environmental and ecological interest, energy efficient buildings are provided by Reserve Bank of India also to decrease the substance which cause harm to ozone layer some of the air condition plants are replaced by RBI in various banks. Small Scale Industries which are involved in energy saving projects are provided by Small Industries Bank In India(SIDBI) which will encourage them to perform well. State Bank of India(SBI) is providing an innovative approach towards CSR by introducing “Green Banking”.
The green banking is concerned with sustainable and ethical banking. The main purpose of green banking is to increase the awareness of environmental friendly programme and to reduce the carbon foot print which effects the environment negatively. The green channel counter method has been adopted by SBI to change their branches to paperless which is a good policy against deforestation. To prevent pollution and to increase recycling procedure, SBI has Started “Panet Earth” which helps the society in reducing the waste and to preserve water and energy.
Community As child labour is one of the major problems faced by India, the children below 14 years who are from low income group are provided with free education by ICICI bank. This bank also provides various awareness programs on HIV/AIDS. With the Support of NGO’s the Punjab national banks are implementing various technical programmes for better education to people from rural areas and also they are providing “micro credit policy” which helps the society in increasing income level and reducing unemployment.
To help in increasing local economy, more than hundred villages are adopted by Bank of Baroda (BOB). Some of the small commercial banks are also undertaking various CSR activities like blood donation, health camps, welfare activities of students, self employment opportunities, etc. The Impact of CSR on Indian Banking Sector According to research conducted by Pava and Krauz(1996)there is positive relationship between CSR and Financial performance of the organisation.
On the other side some researches from Hopkin and cove(2003)proved that there is chance of negative impact on share price and brand image on organisations as a result of socially irresponsible practices and bad CSR strategies. According to the survey conducted by Bihar and Pradhen (2011) CSR has positive impact on performance and image of the bank. For example, ICICI one of the leading Indian Commercial Banks was able to improve the brand image and profit of the business with fine CSR strategies.
So the CSR activities will help to improve the performance of the bank by giving the banks good brand image. By less consumption of office stationeries, energy and water operational costs of the organisations can be reduced, helps to maintain good relationship with the stakeholders, by adopting eco friendly products health hazards of the employees can be reduced. Thus it can be said that the CSR activities help the banking sector to perform the business with Legal and Ethical responsibilities there by making the organisation a good corporate citizen.