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.

1

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.

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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

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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

(19141960)

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

(19601980)

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 134 th 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.

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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

5

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 Compan

y 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

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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

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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.

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Vijaya

Bank L

td.

Karnata

ka Ban

k Ltd.

Canara

Bank

0

1000

2000

3000

4000

Percentage (%)Karmayog CSR 2010 Rating (out of 5)Net profit after taxProfit before tax ( Rs in Crores

Figure 2: Chart representation of Karmayoga CSR Ratings of Banks

Vijaya Bank Ltd. Corporation Bank Ltd.

Karnataka Bank Ltd.

Syndicate Bank Canara Bank

Profit be-fore tax ( Rs in Crores

759 2146 167 1026 2889

Net profit after tax

507 1181 167 914 3000

Karmayog CSR 2010 Rating (out of 5)

1 3 1 2 3

Percentage (%)

10 30 10 20 30

500

2500

4500

6500

Karmayoga CSR Ratings of Banks

Axi

s Ti

tle

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.

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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.

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