Does any banking sector in dakshina kannada district have long histories and demonstrable achievements towards csr initiatives
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Does any banking sector in dakshina kannada district have long histories and demonstrable achievements towards csr initiatives

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    Does any banking sector in dakshina kannada district have long histories and demonstrable achievements towards csr initiatives Does any banking sector in dakshina kannada district have long histories and demonstrable achievements towards csr initiatives Document Transcript

    • 1 DOES ANY BANKING SECTOR IN DAKSHINA KANNADA DISTRICT HAVE LONG HISTORIES AND DEMONSTRABLE ACHIEVEMENTS TOWARDS CSR INITIATIVES? *Ms. Ramyashree M G, PhD Research Scholar (UGC-JRF), Department of Commerce, Mangalore University *Dr. Ishwara P, Research Guide, Associate Professor, Department of Commerce, Mangalore University ___________________________________________________________________________ Abstract The popularity concept of Corporate Social Responsibility is increasing in over the last century in India. The concept of social responsibility becomes one of the tool for achieving the most competitive and dynamic knowledge-based economy. There is a global recognition of Corporate Social Responsibility (CSR) of the financial institutions in developed countries and the lack of interest in the relevance of this concept in developing country, it is essential to investigate the relation between Corporate Social Responsibility and Financial Performance in the Indian banking sector. This research paper defines on a theoretical level the concept of Corporate Social Responsibility, its development, its present form and the influence on financial performance of the banking industry. The study reveals the determinants and conditions for developing CSR strategies within banks. The main objective of this paper is to examine the nature of relationship between corporate social responsibility (CSR) and financial performance (FP). It shows CSR initiatives In doing so we have summarized the findings of the empirical studies, drawn the conceptual framework, measured CSR by developing a measure of corporate social performance (CSP) and finally made an investigation on the banking sector of Dakshina Kannada District. In this respect, the CSR status measured in this study would serve as an important benchmark for further studies. Keywords: Banking Sector, Corporate Social Performance, Corporate Social Responsibility, CSR Initiatives.
    • 2 Introduction With the emergence of civilisation of mankind, social behaviour became an integral part of life and every activity. Today the success of a company is in threefold say financial, environmental and social commitment. In recent years, there has been a growing interest, both in the academic as well as the business world, around the issue of Corporate Social Performance (CSP) - a multidimensional measure (Carroll, 1991; Griffin and Mahon, 1997) of corporate social responsibility (CSR) that captures firm actions aimed at engaging a broader set of stakeholders and ranging across a wide variety of inputs, internal routines or processes, and outputs.Bank has its own philosophy on CSR. It is also observed that a fixed Percentage of profit is spend (i.e.1%) on CSR. No evidence is found in Annual report about the separate CSR Report but section is inserted on CSR by RBI. According to the recent updates of Companies Bill 2012, the Ministry of Corporate Affairs made it mandatory to utilize 2% of Net profit for CSR activities in India. The bank engagedin the socioeconomicdevelopment, rural development andsustainable economic devel opment of the country. Significance of the study The purpose of this study was to investigate the relationship between organization corporate social responsibility and financial performance of commercial banks, to examine the character of corporate social responsibility in organizations ,to establish the relationship between organization social responsibility and financial performance, to investigate the relationship between corporate social responsibility and financial performance, to assess the relationship between organization social capital and corporate social responsibility. Statement of the problem The financial performance of banks in Dakshina Kannada has continuously declined in the past years regarding social responsible activities. This could be attributed to weak organization social Capital, Personnel insufficient corporate social responsibility. Further there is mistrust and absence of associability in many banks. So there is need of studying Banking sectors responsibility towards social welfare and their performance.
    • 3 Objectives of the study i. To understand the scenario of corporate social responsibility in India. ii. To examine the character of corporate social responsibility in organizations. iii. To analyse the bank performance towards CSR through case study. iv. To investigate the relationship between corporate social responsibility and financial performance. v. To suggest measures on the basis of findings of the research study. Scope of the Study The study focused on the commercial banks carrying out their activities in Dakshina Kannada district. Research Methodology The present study is in partly descriptive partly diagnostic in nature. Conceptual framework was developed from the secondary data comprising of the published literature. With the research problem primary data will be generate through the survey method on the sample units selected in Dakshina Kannada District in Karnataka State. A structured questionnaire and personal interview will be used to generate primary data. Convenience sampling method is used to generate primary data. The data was collected from a sample of 5 Banks originated from Dakshina Kannada District itself such as Vijaya bank with, corporation bank, Karnataka Bank, Syndicate Bank and Canara Bank. CSR: Conceptual framework Most authors argued in favour of CSR, despite the lack of consensus on what it really meant. However, Friedman (1962) promoted contrary viewpoint by asserting that “businesses had no other social responsibility than to make as much profit as possible”. CSR scenario in Indian Context To describe the current state andfuture prospects of CSR in India, Sundar (2000) divi ded thedevelopment of CSR into four phases based on the country’spolitical and economic ba
    • 4 ckground. Later on, Chahoud etal. (2007) reinforced him (2000) saying that different CSR practices moved on parallel with India’s historical development. The four phases are as follows: Table 1: Phases of CSR practises Phases Key Thrust Key strategies Phase I (Till 1914) CSR motivated by charity and philanthropy The oldest form of CSR was motivated by charity and philanthropy with direct influence from culture, religion, family tradition, and industrialization process. Phase II (1914-1960) CSR for India’s s o c i a l development Gandhi’sreform programs which includedactivities that so ught in particularthe abolition of untouchability,women’s empowerment and rural development. Phase III (1960-1980) CSR under the paradigm of the “mixed” economy This phase is also characterized by a shift from corporate self regulation to strict legal and public regulation of business activities. Phase IV (1980 onwar ds) CSR interface between philanthropic and business approach. Indian companies and stakeholders began abandoning traditional philanthropic engagement and, to some extent, integrated CSR into a coherent and sustainable business strategy, partly adopting the multi stakeholder approach. Source: Based on Survey of Literature on CSR and Sundar (2000) As a nation, India faces paradoxes and polarities. On the, Human Development Index 2011 India ranks at the lower end, at a 134th of 187countries.Inequality between genders is strong, more than 30 per cent of the At the same time India takes pride in the fact that she has made a mark on the scientific world map. India boasts of the world's third largest educated and technical manpower, and is reckoned as an economic power house. It is a progressive country, and inclusive growth is at the centre of India's national agenda. CSR Initiatives  In rural areas, training in agriculture through Development Committees and in consultation Village Administration.  Focusing on renewable energy for rural livelihood and building of schools and provision of subsidized in the schools.  Cleaning and deepening of wells and ponds and providing potable drinking water.
    • 5  Development of roads and infrastructural facilities.  Building hospitals and providing healthcare facilities and free medical mobile van facilities to the needy residing around the factory. Analysis and Interpretation Following 5 case studies shows the primary research conducted in Dakshina Kannada born 5 banks such as Corporation Bank Ltd., Canara Bank, Karnataka Bank Ltd., Corporation Bank Ltd., and Vijaya Bank Ltd. Relating to the CSR areas and its effectiveness in the activities. Case Study 1 Bank Compa ny Type CSR Activities Trust / Foundation for CSR CSR Areas Three main CSR activities Corporati on Bank Ltd. 1906 Public Sector Corporation Bank Economic Development Foundation 1. Community Welfare 2. Disaster Relief 3. Education 4. Healthcare 5. Poverty Eradication 6. Rural Development 7. Vocational Training 8. Women 1. Rural Development 2. Healthcare 3. Vocational Training Source: Survey Case Study 2 Bank s Compa ny Type CSR Activities Trust / Foundation CSR Areas Three main CSR activities Cana ra Bank 190 Public Sector Canara Bank Centenary Rural Developmen 1. Community Welfare 2. Disaster Relief 3. Education 4. Healthcare 1. Rural Development 2. Women's empowerment 3. Education and employment
    • 6 6 t Trust 5. Poverty Eradication 6. Rural Development 7. Vocational Training 8. Women Primary Source: Survey Case Study 3 Bank Company Type CSR Activities Trust / Foundation CSR Areas CSR Main Activities Karnataka Bank Ltd. 1924 Private Sector No 1. Community Welfare 2. Disaster Relief 1. Community Welfare 2. Disaster Relief Primary Source: Survey Case Study 4 Bank Company Type CSR Activities Trust / Foundation CSR Areas CSR Main Activities Syndicate Bank 1925 Public Sector No 1. Education 2. Healthcare 3. Physically Challenged 4. Poverty Eradication 5. Rural Development 6. Women 1. Rural Development 2. Education 3. Healthcare Primary Source: Survey
    • 7 Case Study 5 Bank Company Type CSR Activities Trust / Foundation CSR Areas Three main CSR activities Vijaya Bank Ltd. ( 1931) Public Sector Vijaya Rural Development Foundation (VRDF) 1.Community Welfare 2.Education 3.Healthcare 4. Rural Development 5. Vocational Training 6.Women 1. Rural Development 2. Community Welfare 3. Healthcare Primary Source: Survey Financial Performance and CSR Relationship Table No. 2 Financial Performance and CSR Relationship Banks No. of employe e Branche s in India. Profit before tax(Rs in Crores) Net profit after tax (Rs in Crores) CSR Budget Karmayog CSR 2010 Rating Vijaya Bank Ltd. 11565 1190 759 507 Not disclosed 1/5 Corporation Bank Ltd. 13143 1155 2146 1181 Not Disclosed 3 / 5 Karnataka Bank Ltd. 5244 464 167 167 Not Disclosed 1/5 Syndicate Bank Not disclosed 35 cities 1026 914 Not Disclosed 2 / 5 Primary Source: Survey
    • 8 Table No. 3 Karmayog CSR 2010 Rating (out of 5 Scores) Banks Profit before tax ( Rs in Crores) Net profit after tax Karmayog CSR 2010 Rating (out of 5) Percentage (%) Vijaya Bank Ltd. 759 507 1 10 Corporation Bank Ltd. 2146 1181 3 30 Karnataka Bank Ltd. 167 167 1 10 Syndicate Bank 1026 914 2 20 Canara Bank 2889 3000 3 30 Total 6987 5769 10 100 Primary Source: Survey Figure 1: Graphical representation of CSR performance and Financial Performance of the banks Interpretation The above Figure 1 shows the variations of banks profitability and performance of the 5 Banks. X Axis shows Banks and Y Axis shows Profitability of the Banks. Karnatka Bank’s profit before tax and after tax is same. Canara Bank is having more profit after tax. Rest other banks having less in Primary Source: Survey profit after tax. Canara banks financially sounds. 0 500 1000 1500 2000 2500 3000 3500 4000 Karnataka… SyndicateBank CanaraBank Tatal Percentage (%) Karmayog CSR 2010 Rating (out of 5) Net profit after tax
    • 9 Figure 2: Chart representation of Karmayoga CSR Ratings of Banks Primary Source: Survey Figure 2 depicts the percentage of Karmayog organisation scoring on the basis of Corporate social responsibility activities towards social welfare. According to the graph it is clear that comparatively Canara bank is good enough in financial strength and in CSR activities. Findings It provides a summary of selected empirical studies where the second column indicates the statistical relation between CSR and corporate financial performance.  As shown in the case study 1 under corporation bank has the Trust of Corporation Bank Economics Development Foundation CSR activities and works under 8 CSR areas with major activities of Rural development, Health Care and Vocational Training.  Canara Bank has its own Trust named “ Canara Bank Centenary Rural Development Trust’ with 8 CSR areas and major activities of Rural Development, Women Empowerment Education and Employment.  Karnataka Bank has no CSR trust/ Foundation. Key CSR area only Community Welfare and Disaster Relief.  Syndicate Bank is also not having a trust for CSR activities.. But works in the 5 areas.. Key activities include Rural Development, Education and Health care.  Vijaya bank has a trust as Vijaya Rural Development Foundations (VRDF) with 6 CSR activities. And Key areas like Rural Development Community, Welfare Healthcare. Vijaya Bank Ltd. Corporatio n Bank Ltd. Karnataka Bank Ltd. Syndicate Bank Canara Bank Percentage (%) 10 30 10 20 30 Karmayog CSR 2010 Rating (out of 5) 1 3 1 2 3 Net profit after tax 507 1181 167 914 3000 Profit before tax ( Rs in Crores 759 2146 167 1026 2889 0 1000 2000 3000 4000 5000 6000 7000 AxisTitle Karmayoga CSR Ratings of Banks
    • 10  Not disclosed CSR budget in all the bank’s annual reports and publication.  Karmayoga scored 5 points to rank the organisation for CSR activities Vijaya bank with 1/5, corporation bank 3/5, Karnataka Bank 1/5, Syndicate Bank 2/5 and Canara Bank 3/5.  Among 5 Parent Banks of Dakshina Kannada Canara Bank is working with more number of employees effectiveness in CSR top most, next Corporation bank, Syndicate Bank, Vijaya Bank and finally comes Karnataka Bank.  Finally, it is clear that Public sector banks performing well in CSR than Private Sector Banks. Suggestions  Each bank should disclose the information regarding the CSR budget.  Banks should have a separate department for maintaining an account and activities of social responsible activities.  According to Companies Bill 2012 the companies must implement 2% of Net profit of 3 preceding years profit for corporate social responsibility.  Individual responsibility, awareness and initiatives have to develop among banking Industry. Conclusion Finally, a Committee/ trust/ association have to set up to monitor the Corporate Social Responsibility Policy of the bank from time to. “There is need of well versed in the language of sustainability in the field of banking industry in social, environmental, and financial responsibility; clearly, their version of Corporate Social Responsibility is not lip service. In sum, Banking Sector should keep sustainability initiatives and one to look to for a sustainable corporate approach to CSR in a way that helps, not hurts, the bottom line.
    • 11 Reference: 1. Hung Woan Ting, Bala Ramasamy, Lee Chew Ging, (2010) "Management systems and the CSR engagement", Social Responsibility Journal, Vol. 6 Iss No. 3, PP 362 – 373. 2. Csr In BanksCanara Bank Ltd. _ Csr Rating 2010 - Corporate Social Responsibility - India _ Details Of Csr Of The 1-500 Companies For The Year 09-10 _ Www.Karmayog.Org_File 3. Csr In BanksCorporation Bank Ltd. _ Csr Rating 2010 - Corporate Social Responsibility - India _ Details Of Csr Of The 1-500 Companies For The Year 09-10 _ Www.Karmayog.Org_Files 4. Csr In BanksKarnataka Bank Ltd. _ Csr Rating 2010 - Corporate Social Responsibility - India _ Details Of Csr Of The 1-500 Companies For The Year 09-10 _ Www.Karmayog.Org_Files 5.Suman Kalyan Chaudhury ,Sanjay Kanti Das , Prasanta Kumar Sahoo (2011) practices Of Corporate Social Responsibility (Csr) In Banking Sector In India:An Assessmentvolume , vol 4. 6. Bhattacharya, C. B., and Sankar Sen. 2004. Doing Better at Doing Good: When, Why, and How Consumers Respond to Corporate Social Initiatives. California Management Review 47 (1): 9–24. 7. Dr. Jyotsa Diwan Mehta (2009), “Beyond CSR: Corporate Sustainability- A Long term perspectives”, GYAN Management – An Annually Referred Journal of Management and Technology, Vol. 3, Iss No.1, Pp 158-166. 8. L. Kvasnicková Stanislavská, K. Margarisová, K. Štastná Corporate Social Responsibility In Banking Sector L Universitatis Agriculturae Et Silviculturae Mendelianae Brunensis Volume Lx 21 Number 2, 2012 9. Lauren Anderson & Gretchen Longenbach (2010), Corporate Social Responsibility Analysis: Standard Chartered Bank Spring 2010